Bleak outlook for Pacific tourism

PACIFIC – The Asian Development Bank says tourism-driven economies in the Pacific will be the worst affected by the Covid-19 pandemic.

In its 2020 Development Outlook, the bank forecasted average growth across its Pacific member countries to contract by 0.3 per cent assuming even just a three-month interruption in travel and trade.

The Bank’s lead Pacific economist, Rommel Rabanal said the worst affected would be the likes of the Cook Islands, Fiji, Palau, Samoa, and Vanuatu, whose economies were largely driven by tourism.

Rabanal said for these countries the negative impact of Covid-19 was unprecedented.

“So, for example, the 2020 projection for the Fiji economy is for it to contract by about 4.9 per cent. It hasn’t contracted that deeply even after big disasters, say for example like Cyclone Winston in 2016. So its looking like a severe impact on tourism-based economies,” he said.

But Rabanal said looking further out to next year, the bank was being cautiously optimistic about the potential for growth in the Pacific.

“For 2021 we are projecting a cautious recovery of growth to return to an average of about 2.7 per cent but that would depend heavily on how long the travel restrictions and disruptions to movement of people and goods last.”

Rabanal said it would also rely on how quickly tourism bounced back and delayed construction projects got off the ground as well as the resumption of labour mobility and cross-border trade.

The ADB report noted Pacific governments acted quickly and decisively to restrict travel from the fast-growing list of Covid-19 affected countries.

But the bank’s Director General for the Pacific, Leah Gutierrez, said such restrictions could come with a high economic cost.

“ADB is committed to supporting the Pacific cope with the Covid-19 pandemic and help address immediate needs,” Leah Gutierrez said.

“We are providing grant financing and support to procure needed medical goods and equipment in selected countries,” she said.

The ADB is also working with ministries of finance to assess their budget support needs in coordination with other development partners.

>RNZ