Economic Research Forum (ERF)

The impact of Covid-19 on the tourism sector in MENA

4480
Following the big fall in international tourist arrivals in the Middle East and North Africa early in the pandemic, some countries restarted activities during the summer with an emphasis on health and hygiene measures. But as this column explains, a second wave of Covid-19 could paralyse the sector and lead to bankruptcy for many businesses.

In a nutshell

Although the effects of the first wave of Covid-19 have been devastating for the tourism sector of MENA countries, a second wave could be catastrophic.

Direct and indirect employment in tourism is historically high in countries such as Egypt, Morocco and Tunisia; support will be needed for parts of these countries where the sector has been hit hard by unemployment.

Since the tourism sector in most developing countries is linked closely to international flights, recovery will be dependent on the opening of international borders and the resumption of regular commercial flights, which may not happen for two or three years.

Tourism is an important pillar of the economies of the Middle East and North Africa (MENA), accounting for about 5.3% of GDP growth and 6.7 million jobs across the region. The unknown duration and scope of the pandemic and the worldwide panic accompanying it have caused a tourism crisis (Ben Youssef et al, 2020).

The effects of Covid-19 on the tourism sector can be examined in the context of two waves of the infection. Although the impact of the first wave has been devastating for the tourism sector in MENA countries, a second wave could be catastrophic.

The impact of the first wave of Covid-19 on tourism in MENA countries

The worldwide lockdown during the first wave of Covid-19 was imposed to prevent the spread of the virus. It affected tourism across the world including MENA countries where the effects were particular dire for Egypt, Lebanon, Morocco and Tunisia, all of which rely very heavily on tourism.

According to the United Nations World Tourism Organization (UNWTO), the number of tourist arrivals has fallen by about 57% in the Middle East and by about 62% in North Africa. The cancellation of major events due to take place in the region, such as Dubai EXPO 2020 and the annual Haj pilgrimage in Saudi Arabia, expected to attract 25 million visitors and two million religious tourists respectively, have had devastating effects on the economies of the region. In the first nine months of 2020, Tunisia saw its tourism revenue drop by 60%, and it is expected that by the end of 2020, revenues will be down by 70%.

The aviation sector is one of the most badly affected industries. The International Air Transport Association (IATA) has warned that air traffic in the region is likely to decrease by more than half this year. Airline companies are being affected as severely as in other parts of the world.

According to a report by the African Airlines Association (AFRAA), several carriers have suffered badly. Figure 1 shows that based on the available seat to kilometres ratio, Egypt Air has lost two billion, Royal Air Maroc 1.6 billion, Air Algeria 1.1 billion and Tunisair (which has a smaller fleet of aircraft) 600 million. Air Algeria’s financial losses could reach 89 billion dinars by the end of 2020 and Qatar Airways, which has experienced a drastic drop in demand due to the crisis, has issued warnings about staff reductions.

Figure 1: Decrease in total available seat kilometres in April, May and June 2020

 

(Source: AFRAA)

 

Re-opening of tourism activities accompanied by security and health measures

Some MENA countries made efforts to attract tourists during the summer. Tunisia re-opened its land, sea and air borders on 27 June, allowing tourists to enter the country based on a colour-coded risk assessment system. Egypt resumed its tourism activities on 1 July under strict hygiene measures and controls on numbers of tourist arrivals, resulting in the arrival of around 6,000 tourists, mostly from Switzerland, Ukraine and Belarus.

Dubai, the most popular tourist destination in the United Arab Emirates began accepting tourists on 7 July. Haj pilgrims were restricted to residents of Saudi Arabia. Morocco embarked on a gradual re-opening of its borders on 14 July, subject to strict rules.

Several organisations have developed safety protocols and certifications to try to ensure the survival of the tourism sector and the safety of tourists. They emphasise the importance of restoring tourists’ confidence through the provision of safety and security protocols to reduce the risk of infection and spread of Covid-19 via the tourism sector.

A second wave of Covid-19 could paralyse tourism in MENA countries

A second wave of coronavirus infections is a huge threat to the recovery of tourism in the region. The strict and compulsory safety protocols developed by UNTWO and other tourism organisations are not facilitating rapid recovery of the tourism sector. While this sector is considered a cornerstone of MENA economies, it is likely to be responsible for a second wave of Covid-19. At the beginning of the autumn, the number of cases rose. While the first wave caused many devastating effects, a second wave of Covid-19 could be disastrous for the sector.

Some MENA countries, such as Jordan, Lebanon, Morocco and Tunisia have recorded higher numbers of Covid-19 cases in recent days. The effects on the tourism sector are likely to worsen, leading to the bankruptcy of many businesses by the end of the year.

Travel agencies and airline companies are suffering huge losses despite reducing their activities and adjusting staff numbers to try to cut costs. Employment in the tourism sector in MENA countries will continue to deteriorate as the situation develops, and any recovery will take a long time. While Egypt recently announced no new Covid-19 cases related to tourists. the tourism sector in the country remains fragile.

Measures such as a 14-day quarantine on arrival at a destination have reduced tourism and grounded flights. Some airlines are offering pre-flight testing to try to avoid mandatory 14-day quarantines. Testing of passengers will not stop the spread of the virus but should limit it. MENA airlines need to implement measures to revive and build passenger confidence; airport testing is one possible solution.

Conclusion

The relaunch of some tourism activities is showing that recovery in this sector will take time; a second wave could lead to many businesses going bankrupt and huge rises in unemployment.

Any recovery of tourism will require support for employment in this region where unemployment in the sector is particularly high following the Covid-19 crisis. Direct and indirect employment in tourism is historically high in countries such as Egypt, Morocco and Tunisia.

In addition, domestic travel should be promoted by targeted policies to ease the psychological impact of confinement. Public interventions such as holiday vouchers should be introduced for travellers of all ages. Finally, it will be crucial to restore consumer confidence in all types of travel, and airlines should adopt pre-flight testing to avoid compulsory quarantine periods.

Since the tourism sector in most developing countries is linked closely to international flights, its recovery will be dependent on the opening of international borders and the resumption of regular commercial flights, which may not happen for two or three years.

Further reading

Adel Ben Youssef, Adelina Zeqiri and But Dedaj, B. (2020) ‘Short and Long Run Effects of Covid-19 on the Hospitality Industry and the Potential Effects on Jet Fuel Markets’, IAEE Energy Forum/Covid-19 Issue 2020.

UNWTO (2020) International Tourism and Covid-19 2020.

AFRAA (2020) AFRAA Covid-19 IMPACT ASSESSMENT II.

Tags: , , , , ,

Most read

Trust in Lebanon’s public institutions: a challenge for the new leadership

Lebanon’s new leadership confronts daunting economic challenges amid geopolitical tensions across the wider region. As this column explains, understanding what has happened over the past decade to citizens’ trust in key public institutions – parliament, the government and the armed forces – will be a crucial part of the policy response.

Growth in the Middle East and North Africa

What is the economic outlook for the Middle East and North Africa? How is the current conflict centred in Gaza affecting economies in the region? What are the potential long-term effects of conflict on development? And which strategies can MENA countries adopt to accelerate economic growth? This column outlines the findings in the World Bank’s latest half-yearly MENA Economic Update, which answers these questions and more.

Climate change: a growing threat to sustainable development in Tunisia

Tunisia’s vulnerability to extreme weather events is intensifying, placing immense pressure on vital sectors such as agriculture, energy and water resources, exacerbating inequalities and hindering social progress. This column explores the economic impacts of climate change on the country, its implications for achieving the sustainable development goals, and the urgent need for adaptive strategies and policy interventions.

Assessing Jordan’s progress on the sustainable development goals

Global, regional and national assessments of countries’ progress towards reaching the sustainable development goals do not always tell the same story. This column examines the case of Jordan, which is among the world’s leaders in statistical performance on the SDGs.

Small businesses in the Great Lockdown: lessons for crisis management

Understanding big economic shocks like Covid-19 and how firms respond to them is crucial for mitigating their negative effects and accelerating the post-crisis recovery. This column reports evidence on how small and medium-sized enterprises in Tunisia’s formal business sector adapted to the pandemic and the lockdown – and draws policy lessons for when the next crisis hits.

Unleashing the potential of Egyptian exports for sustainable development

Despite several waves of trade liberalisation, Egypt’s integration in the world economy has remained modest. In addition, the structure of its exports has not changed and remains largely dominated by traditional products. This column argues that the government should develop a new export strategy that is forward-looking by taking account not only of the country’s comparative advantage, but also how global demand evolves. The strategy should also be more inclusive and more supportive of sustainable development.

The threat of cybercrime in MENA economies

The MENA region’s increasing access to digital information and internet usage has led to an explosion in e-commerce and widespread interest in cryptocurrencies. At the same time, cybercrime, which includes hacking, malware, online fraud and harassment, has spread across digital networks. This column outlines the challenges.

Rising influence: women’s empowerment within Arab households

In 2016 and again in 2022, a reliable poll of public opinion in the Arab world asked respondents in seven countries whether they agreed with the statement that ‘a man should have final say in all decisions concerning the family’. As this column reports, the changing balance of responses between the two surveys gives an indication of whether there been progress in the distribution of decision-making within households towards greater empowerment of women.

Macroeconomic policy-making for sustainable development in Egypt

In recent years, economic policy in Egypt has been focused primarily on macroeconomic stabilisation to curb inflation, to reduce the fiscal deficit and the current account deficit, and to increase GDP growth. As this column explains, this has come at the expense of the country’s progress on the Sustainable Development Goals, which is rather modest compared with other economies in the region or at the same income level. Sustainable development needs to be more integrated with the conception and implementation of fiscal and monetary policies.

Economic consequences of the 2003 Bam earthquake in Iran

Over the decades, Iran has faced numerous devastating natural disasters, including the deadly 2003 Bam earthquake. This column reports evidence on the unexpected economic boost in Bam County and its neighbours after the disaster – the result of a variety of factors, including national and international aid, political mobilisation and the region’s cultural significance. Using data on the intensity of night-time lights in a geographical area, the research reveals how disaster recovery may lead to a surprising economic rebound.