By: Staff Writer
September 1, 2023
The Inter-American Development Bank (IDB) in their new report, “Caribbean Economies at a Crossroads: IDB Report,” says that Caribbean economies that have tourism led growth are recovering at a rapid pace post-pandemic.
The report said: “The global economy and Caribbean regional economies are at a crossroads. In general terms, tourism-oriented economies have recovered more rapidly than expected from the sharp pandemic-induced contraction of 2020.
“After the economic recovery of 2021 and 2022, key forecasters expect a global economic slowdown in 2023; however, that slowdown is mostly driven by an expected slowdown in advanced economies. That said, those advanced economies remain the key drivers of demand for Caribbean tourism exports…”
Country circumstances vary substantially as some countries’ (e.g., The Bahamas and Jamaica) tourism sectors have recovered more rapidly than others (e.g., Barbados).
Global and regional tourism trends are clearly critical for tourism-dependent countries. During 2022 and into the first quarter of 2023 international tourism arrivals began to surge back towards pre-pandemic levels.
“The World Tourism Organization data reveal differences across regions, and we see that the Caribbean sub-region has outperformed the Americas and the World recovery in this regard. While the international tourist arrivals in 2023Q1 were almost 20 percent and 15 percent below its pre-pandemic level in the World and Americas, respectively, the difference in the Caribbean was only 6%. Other regions have fared even better: North Africa and the Middle East reportedly are already above 2019 levels in the first quarter of 2023. In addition, in the countries focused on in this report, tourist arrivals in The Bahamas and Jamaica were already surpassing 2019 levels in early 2023,” the report noted.
Uncertainty remains as to whether the global tourism recovery will eventually return to the growth trajectory prior to the pandemic or rise to an even faster growth trajectory.
There were major structural changes in aggregate demand during the pandemic, as households could no longer spend on face-to-face services, including tourism. As travel restrictions receded, the “binge” shopping for consumer durables may have transitioned to “revenge” travel. It is not clear how long rising demand for tourism will last.
The report cautioned: “Countries and regions outperforming the global totals are necessarily experiencing an increase in market share. Again, it is difficult to predict whether this is a temporary or more permanent phenomenon. For example, American tourists may choose The Bahamas and Jamaica based on those countries’ geographic proximity to the United States. Will this benefit be sustained, perhaps as first-time tourists to these destinations have now “discovered” these locations? At the same time, there is some evidence that the increase in tourism in those locations is also being driven by non-traditional source markets, and this bodes well for a possible permanent increase in market share.”
The region should not become overzealous over the fast recovery on the back of revenge travel because it is a bubble that will subside, at best, and pop, at the very worst.