Instability in tourist dependent economies

Other Names:
Unstable tourism

Many branches of a national economy supply services and goods for tourism. In the case of some branches all, or almost all, of their activity is related to tourism, for example, hotels and similar accommodations, charter air passenger companies and travel agents; in the case of other branches, tourism supplies a major part of their revenue, for example, restaurants and souvenir shops in tourist resorts.  Tourism plays a major part in the balance of payments of many countries, frequently exceeding in importance the imports or exports of merchandise. 


In addition to international tourism, domestic tourism consists of hundreds of millions of holidays and other recreational and business trips away from home. The development of tourism may, in certain circumstances, contribute to pressures on the general level of prices. Its inflationary effect varies considerably from one country to another. Although the main effects are encountered in the accommodation sector, such as has happened with AirBnB, in some countries they may extend to basic items, including food and clothing, creating local socio-economic problems.

Travel practically ground to a halt during the COVID-19 pandemic in 2020. According to the United Nations World Tourism Organization (UNWTO), international tourist arrivals plunged 93 per cent in June when compared to 2019 and the arrivals dropped by 65 per cent in the first half of the year.  This massive drop in international travel demand over the period January–June 2020 translated into a loss of 440 million international arrivals and about $US460 billion in export revenue from international tourism. This is around five times the loss in international tourism receipts recorded in 2009 amid the global economic and financial crisis.  But the pandemic didn’t affect all countries equally. Some countries almost entirely reliant on tourism were effectively shut down, while other countries with more diverse economies fared better: Asia and the Pacific the hardest hit with a 72 per cent fall in tourist arrivals in the first half of 2020, partly due to being the first region to feel the impact of COVID-19; Europe was the second-hardest hit with a 66 per cent decline; Africa and the Middle East both saw a 57 per cent decline, while the Americas saw arrivals decline by 55 per cent.  Data from the World Travel and Tourism Council (WTTC), showing the dependence of GDP on tourism for countries (with large economies), listed Mexico as the country most affected, with 15.5 per cent of its GDP coming from tourist-related activities. Spain and Italy were the worst hit of the European nations.  China and Australia also featured in the top-fifteen list, with South Korea (4.2%) at the bottom.

Related UN Sustainable Development Goals:
GOAL 8: Decent Work and Economic GrowthGOAL 11: Sustainable Cities and Communities
Problem Type:
F: Fuzzy exceptional problems
Date of last update
17.10.2021 – 08:48 CEST