When the coronavirus first originated in China, it was thought that South Asia was the region most likely to be hard hit. After all, the region is home to a staggering 1.94 billion people (which is exactly one-quarter of the world’s total population), while nations such as Bhutan, Bangladesh and Nepal are also noticeably poor.
However, South Asia has only recorded 19,431 deaths as of June 22nd, despite a total of 765,082 cases having been reported during the first half of the year.
The Covid-19 pandemic has impacted on the South Asian economy, however, which is heavily reliant on tourism and travel from across the globe. But what does the future hold in this regard, and how can the tourism industry recover in the near and medium-term?
How have Travel and Tourism Been Impacted so Far?
While South Asia may have avoided the worst of Covid-19 in terms of fatalities, there can be no doubt that the region has seen the revenues generated through tourism decline substantially as the pandemic has spread.
Of course, this has much to do with the pace and reach of the coronavirus pandemic, which has impacted most regions throughout the world and brought international travel to a complete standstill.
Globally, UNWTO has estimated that the tourism industry has lost $450 billion during the Covid-19 outbreak, with wealthy and developed nations such as Spain, France, Italy and the US featuring the highest rates of infection. Visitors from these countries are the most likely to travel to South Asia, and there’s no doubt that their disposable income has been missed during the first half of 2020.
The decline of tourism in South Asia has also impacted on the region’s labour market, even in nations that have managed to avoid large-scale deaths. In Thailand, for example, it’s estimated that the total unemployment rate could climb to 25% during Q3, while five million Vietnamese citizens have become unemployed during Q2.
How Can South Asia Drive Recovery in the Tourism Sector?
The tourism sector may also face additional challenges in the near-term, even as various borders reopen to international visitors.
For example, forex traders will testify that various currencies have depreciated during the coronavirus pandemic, largely due to a combination of quantitative easing measures and declining capital inflows from overseas.
This impacts directly on specific currency exchange rates, with assets such as the Mexican peso having recently slumped to an all-time low for the second consecutive month. This weakens the purchasing power of domestic currencies, making it harder for travellers value for their hard-earned cash.
To negate this, countries in South and Southeast Asia would do well to follow the example of Hong Kong, who recently sold HK$3.953 billion into the market as the currency hit the strong end of its trading band.
Vietnam is also taking proactive steps to reboot its ailing tourism sector, primarily by focusing on domestic travel. To achieve this, the government is making strategic investments in domestic hotels and transportation links, while seeking to drive increases in demand and lifting its existing social distancing measures.
Daily domestic flights between popular locations such as Hanoi and Ho Chi Minh City have also been restored, and adopting this approach will undoubtedly enable South Asia nations to kick-start their economic recovery.