Revitalizing tourism in countries like the Philippines whose domestic industry had been badly hit by global and local movement restrictions amid the prolonged COVID-19 pandemic would entail fiscal stimulus, especially infrastructure development, the International Monetary Fund (IMF) said.
“Fiscal support can help offset some of the losses in the economy. Asean-5 (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) is an instructive case, as countries in the region are somewhat diversified and some fiscal space is available,” the IMF said in a Feb. 19 report titled “Tourism in the Post-Pandemic World: Economic Challenges and Opportunities for Asia-Pacific and the Western Hemisphere.”
Prepandemic, the Philippine tourism sector’s earnings were equivalent to more than 20 percent of gross domestic product (GDP) and accounted for about a fifth of total employment in the country.
“Fiscal stimulus can at least temporarily shift employment and spending into other segments of the economy, as well as support the tourism sector,” the IMF said.
“Member-countries of the Asean-5 have differing amounts of fiscal space [some much more limited than others] but could still consider this sort of stimulus because of the extraordinary circumstances of the pandemic,” the IMF added.
In the Philippines, the Cabinet-level Development Budget Coordination Committee had programmed a budget deficit equivalent to 8.9 percent of GDP this year to keep its fiscal gap in the middle of the pack across Asean and among economies with similar investment-grade credit ratings.
In Asean-5, “fiscal stimulus will be more beneficial when directed toward aiding the recovery and transition of the tourism sector,” the IMF said.
Specifically, “infrastructure investment directed at regions more dependent on tourism can help update facilities or shift the local economy into new areas and, unlike other subsidies through public consumption, provide a longer-term increase in economy-wide productivity,” it said.
Also, “transfers targeted to poorer households that are most likely unemployed [including those in tourism] can support their consumption now, and therefore with more spillovers to the economy as a whole,” it added. INQ