Spain: How Will Tourism Support The Recovery?

Our base case

In our baseline scenario, we assume that the health situation does not worsen, that British tourists will soon be able to travel to Spain with far fewer complications and that the EU certificate becomes operational at the end of June. Given the modest performance in the first half of the year in terms of international tourists and the expected recovery in the second half, we expect 40 million international tourists in 2021. This is more than double the number in 2020, but 50% less than in 2019.

According to our calculations, using the same methodology as the World Travel and Tourism sector, all this implies a total contribution of the sector to GDP of about €110bn in 2021. This is almost double the amount in 2020, but 38% lower compared to 2019. We can conclude that the tourism sector will recover in 2021, but that not all the economic damage from 2020 will be restored this year. 

We believe that the tourism sector will recover in 2021, but that not all the economic damage from 2020 will be restored this year. 

Our estimate of €110bn, however, could be an understatement. In this calculation, we assumed that the average tourist spends as much as in 2019. If tourists spend more on average because they want to make up for a lost time, then the contribution to GDP will be higher. Let’s hope for that!

Number of international tourists in 2019, 2020 and 2021

(Click on image to enlarge)

Source: Instituto Nacional de Estadística
Note: For the EU the countries included are: Belgium, France, Germany, Ireland, Italy, Netherlands and Portugal. 

Conclusion

Accounting for 14% of GDP in 2019, the tourism and travel sector will be key for the Spanish recovery. As the health situation in Spain improves and gets better in the countries where international tourists come from, the sector will be able to recover in the next few months. But given the weak first half of the year and the incomplete recovery in the second half, we think that the level of international tourists in Spain in 2021 will be 50% lower compared to 2019. The contribution of the sector to GDP is also expected to almost double compared to 2020, but will still be about 38% lower compared to 2019.

We continue to forecast GDP growth to be at 5.0% in 2021 and 6.0% in 2022.

For the Spanish economy as a whole, we expect the economy to grow from the second quarter onwards. We continue to forecast GDP growth to be at 5.0% in 2021 and 6.0% in 2022. This implies that the economy will not have reached its pre-crisis level before 2023. Admittedly, risks to these forecasts are to the upside as the national Recovery and Resilience plan could boost growth a bit more than currently expected.

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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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