Friday 29 Mar 2024
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KUALA LUMPUR (Oct 19): Fitch Ratings expects international tourism flows in Asia-Pacific (APAC) to remain subdued through much of 2021 as cross-border travel restrictions are lifted slowly, and as uncertainty lingers around the evolution of the Covid-19 pandemic and the availability of effective vaccines and treatments.

In a report today, Fitch said the coronavirus continued to disrupt international services trade, especially tourism. International tourist arrivals globally declined by 65% year-on-year (y-o-y) in the first half of 2020 (1H20), and in APAC by 72% y-o-y, citing the World Tourism Organization.

The rating agency said some APAC sovereigns are more exposed, explaining that inbound tourism receipts account directly for at least 5% of gross domestic product (GDP) for more than a third of Fitch-rated APAC sovereigns, led by Macau and the Maldives, followed by Thailand and Hong Kong.

“All four of these economies are experiencing large economic contractions in 2020, led by Macau and the Maldives where we project GDP declines of at least 40% and 16% respectively,” it said.

Fitch said governments that had succeeded in curbing Covid-19 began to cautiously ease domestic lockdowns and border controls since late in the second quarter of 2020 (2Q20).

However, it said the recent surge in new cases will impede border reopening and a speedy resumption of cross-border travel.

Fitch said sovereigns with high reliance on fiscal revenue from tourism and related sectors, but with fiscal headroom for countercyclical stimulus and sufficient external buffers, are better placed.

“Elsewhere, demand for travel is being diverted domestically as hotel occupancy rates bottom out despite border closures.

“ A faster domestic tourism recovery will offset revenue loss due to falling inbound tourists, but only partially,” it said.

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