Tourism activity in oil-importing Mena countries expected to bounce back by 2023, IIF says

The tourism sector in the six-member economic bloc of GCC is expected to fare better than the broader region

The Amir Assaf Mosque and Al Omari Grand Mosque located on Waygand Street in downtown Beirut, Lebanon. A faster recovery in the Mena region's tourism sector from the Covid-19 pandemic hinges on rapid Show more

The tourism sectors in Jordan, Lebanon, Egypt, Morocco and Tunisia are only expected to bounce back by 2023 and the recovery will depend on rapid vaccine distribution and investments in digital technology, the Institute of International Finance (IIF) said.

Recovery, however, is expected to be "gradual and limited" and will be slower compared to its GCC counterparts, the IIF said.

"We expect the five tourism-dependent Mena economies to suffer much longer than the six GCC countries from the negative impacts of the pandemic," Garbis Iradian, the IIF's chief economist for Mena, Caucasus and Central Asia, said.

Global aviation and tourism were among the sectors hardest hit by the Covid-19 pandemic, which shuttered borders, ground aircraft and paralysed air travel.

Prior to the pandemic, tourism contributed directly and indirectly to more than 15 per cent of gross domestic product and 35 per cent of foreign exchange earnings in Jordan, Lebanon, Egypt, Morocco and Tunisia, according to the IIF. On average, tourist receipts fell by 75 per cent in 2020, compared with 2019.

Partial information for the first quarter of 2021 shows that the number of tourist arrivals to the five Mena countries were just 25 per cent of what they were in the same quarter of 2020, according to the IIF.

"Recent increases in Covid-19 cases in key source markets, including the EU, will delay the partial recovery to the second half of this year," Mr Iradian said.

Tourists from the EU, UK, Russia, and the US may be lured by other countries in the Mediterranean region, with low-cost brands, or to remain focused more on domestic trips, he said.

A faster recovery in the five Mena countries will depend on more rapid vaccine distribution, stronger healthcare systems, investments in digital technology and diversifying both within and away from the tourism industry, the IIF said.

The Mena countries could learn from the policy measures of other emerging and developing nations that have been providing financial support to their tourism sectors, helping companies to adapt their business models and protecting jobs, the report said.

The IIF emphasised the role of technology in driving a tourism recovery.

"Touchless service delivery and investment in digital technology could be a bridge to recovery but require a reorientation of job creation into new categories," Mr Iradian said. "Expanding the use of innovation and digitalisation would support creating new jobs for the youth, women and other vulnerable groups."