Tourism and COVID-19: An economy-wide assessment

Abstract

The promotion of domestic tourism is widely identified as a promising recovery measure to revive tourism economies severely affected by the COVID-19 pandemic. The paper intends to estimate the economy-wide impacts of a hypothetical scenario of domestic tourism promotion in a small, emerging economy with heavy reliance on international tourism. The estimated impacts are compared with the economy-wide negative impacts of the pandemic via domestic and international tourism, to understand the potential level of compensation of domestic tourism promotion. The industry-level analysis indicates Dutch disease effects due to the decline in international tourism. A hypothetical boom in domestic tourism benefits non-tradable sectors to a significant level. Aggregate level analysis indicates a potential for economic gains through domestic tourism promotion, though such gains are inadequate to fully offset the foregone economic benefits due to loss in international tourism.