Economic impact of Covid-19: Revival of LATAM tourism in a post-pandemic era
The Covid-19 pandemic brought the entire world to a standstill. Among the hardest-hit industries was the Travel & Tourism sector, which ground to a halt due to lockdown restrictions. With most borders being closed off for almost a year, the economic impact of Covid-19 was severe in regions like Latin America.
Latin America, with its diverse cultures, stunning landscapes, and vibrant cities, saw its Travel & Tourism sector—a significant component of its economy—come to a near standstill. In 2019, the sector contributed approximately 9.8% (USD 629 billion) to the region's GDP and supported 24.3 million jobs. Countries like Mexico, Brazil, and Argentina were major attractions, drawing millions of international visitors annually. Similarly, Panama and Uruguay were particularly reliant on tourism, with significant portions of their GDP tied to the sector. However, the economic impact of Covid-19 on Latin American tourism was swift and severe, leading to widespread losses and economic hardship.
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The Covid-19 pandemic brought the entire world to a standstill. Among the hardest-hit industries was the Travel & Tourism sector, which ground to a halt due to lockdown restrictions. With most borders being closed off for almost a year, the economic impact of Covid-19 was severe in regions like Latin America.
Latin America, with its diverse cultures, stunning landscapes, and vibrant cities, saw its Travel & Tourism sector—a significant component of its economy—come to a near standstill. In 2019, the sector contributed approximately 9.8% (USD 629 billion) to the region's GDP and supported 24.3 million jobs. Countries like Mexico, Brazil, and Argentina were major attractions, drawing millions of international visitors annually. Similarly, Panama and Uruguay were particularly reliant on tourism, with significant portions of their GDP tied to the sector. However, the economic impact of Covid-19 on Latin American tourism was swift and severe, leading to widespread losses and economic hardship.
The economic impact of Covid-19 is shown in the figures as revenues shrank by a staggering 38.6% in 2020, resulting in a loss of 5.6 million jobs. Panama, Peru, and Venezuela were among the hardest hit, with each experiencing a 65% decline in the sector’s GDP contribution. Major tourism markets like Brazil and Mexico also faced significant downturns, with approximately 31% reductions in their tourism’s economic contribution. The post-pandemic tourism recovery in Latin America has been a gradual process, with efforts underway to rebuild the sector and stimulate economic growth.
Post-pandemic recovery trends
In the post-pandemic era, the Travel & Tourism sector began to show signs of recovery. By the end of 2023, 60% of the region’s countries had already recovered to their 2019 tourism levels. Countries such as Brazil, Colombia, and Mexico led the way, with their tourism sectors exceeding pre-pandemic levels. Overall, all Latin American countries, except for Venezuela and Suriname, are anticipated to achieve full recovery by 2025. Several factors have contributed to the resilience and recovery of the sector:
- Domestic tourism: With international travel restrictions in place, domestic tourism has become a lifeline for the industry. Domestic spending accounted for 82.8% of internal tourism spending in 2023.
- Government initiatives: In the post-pandemic era, countries implemented various measures to revive tourism, including marketing campaigns, easing travel restrictions, and offering financial support to businesses.
- Sustainability and innovation: The region has been focusing on sustainable tourism practices, with countries like Costa Rica leading the way by utilising 19.9% of its energy from sustainable sources. There is a growing emphasis on eco-friendly travel, which has attracted environmentally conscious travellers.
Looking ahead
The future of tourism in Latin America looks promising. The sector's contribution to GDP is expected to grow at an average annual rate of 2.7% over the next decade, outpacing the wider regional economy. International visitor spending is projected to increase by 10.2% in 2024, surpassing its 2019 levels.
Countries are also making significant investments in infrastructure to support tourism growth. For instance, Colombia and Honduras have made substantial investments in airport infrastructure to accommodate international flights.
However, despite positive trends, challenges remain. The region must address issues such as infrastructure deficits, high taxes, and lack of visa facilitation. Improving connectivity, both within the region and globally, is crucial for sustained growth. Additionally, the tourism sector needs to focus on inclusivity and skill development to provide quality jobs, especially for women and youth. Latin America has made strides in this area, with women accounting for 47.5% of the workforce in the Tourism sector in 2022
In the Future
In the face of adversity, the Latin American tourism sector has demonstrated remarkable resilience. In this post-pandemic time, as the sector continues to recover, there is a unique opportunity to build a more sustainable, inclusive, and resilient tourism sector.
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