Pandemic damage to Philippine tourism worsens in 2021
September 17, 2021 | 6:19 p.m.
MANILA, Philippines – The nascent Philippine tourism industry is expected to suffer larger losses this year as the ensuing threat from the hyper-contagious Delta variant triggers new restrictions and fears that could further cripple travel demand.
Travel revenue is expected to collapse 80% year-over-year in 2021, which, if achieved, would be worse than the 79.5% contraction recorded in 2020, the Bangko Sentral reported on Friday. ng Pilipinas. Explaining the revised forecast, PASB Senior Deputy Governor Iluminada Sicat told a press conference that the recovery of the sector “will depend on resolving the health crisis”.
The central bank said travel receipts are expected to grow at an annual rate of 25% next year, mainly due to so-called “base effects.” It is only in 2023 that dollars generated by tourism will return to their pre-crisis level, the BSP said.
Preliminary data from the BSP showed tourism receipts fell 82.1% year-on-year in the first half of the year, as the government struggles to reopen the country to foreign tourists amid slow vaccination and local epidemics uncontrolled.
Prior to the emergence of the super-infectious Delta variant, BSP had forecast a 15% growth in tourism revenue for this year. But that goal – along with the tourism department’s goal of capturing 10 million foreigners by 2022 – has become elusive after a new wave of infections sparked severe closures in Metro Manila. and neighboring regions on two occasions this year, which some sectors have partly attributed to the beginning of the reopening of tourism.
In turn, the expected drop in tourism receipts should weigh on a “modest” dollar surplus this year. The BSP now forecasts the country’s balance of payments (BOP) to show a surplus of $ 4.1 billion in 2021, lower than its previous projection of a surplus of $ 7.1 billion by the end of this year. the year. Last year the Philippines posted a surplus of $ 16.0 billion.
The balance of payments surplus would be smaller than initially expected, mainly because imports are expected to grow 20% year-on-year in 2021, compared to the old forecast of a 12% expansion. Exports, on the other hand, are expected to grow at an annualized rate of 14%, up from 10% previously.
“Imports are reinvigorated by the infrastructure push under the government’s Build, Build, Build program, leading to an accelerated rebound in demand for capital and raw materials as well as intermediate goods,” BSP said. .
Remittances, a major source of dollars, are expected to grow 6% this year, faster than the previous projection of 4%, due to “increasing global demand for foreign workers as host economies go into recovery mode, ”BSP said. At the same time, the central bank maintained its forecast of 5% growth for profits in the business process outsourcing sector.
The renewed risk aversion of the Delta variant would hit foreign investment in the Philippines. This year, the BSP predicts that foreign direct investment will generate a net inflow of $ 7 billion, down from its previous projection of $ 7.5 billion. Volatile foreign funds, also known as “hot money”, are expected to post a lower net inflow of $ 4.3 billion.
Overall, the country’s dollar reserves are expected to rise to $ 114 billion in 2021, which would be lower than the former BSP estimate of $ 114 billion.