SANTIAGO, Chile, December 29, 2008 – The United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) has put the region on warning that it be hardest hit by the stagnation in tourism caused by the financial crisis.
According to it’s recently published ‘Preliminary Overview of the Economies of Latin America and the Caribbean 2008’, about 75 per cent of tourists to the English-speaking Caribbean come from developed economies that are in recession.
The United Nations World Tourism Organisation (UNWTO) estimates that in 2008, tourism grew between two and three per cent, compared to the 6.6 per cent last year. It is projected that in 2009 it will expand even less – between zero and two per cent.
“In the first eight months of 2008, the arrival of tourists to Central America and South America continued rising by 9.4 per cent and 7.2 per cent, respectively. However, in the Caribbean it grew only three per cent,” ECLAC said, noting that tourism began experiencing a strong deceleration between June and August.
It said that drop was due to “the increasing deterioration of real income and consumer expectations, the volatility of exchange rates, and restraints on consumer loans due to the financial crisis”.
“Between June and August, demand for tourism services in the Caribbean (came) to a standstill due to the lower number of visitors to the Bahamas, Barbados, Bermudas and Puerto Rico – four destinations visited mainly by United States and European travellers,” ECLAC added.
The UN agency suggested that lower inflation and currency depreciation in several Latin American and Caribbean nations could partially compensate the impact on regional tourism caused by the financial crisis.
“Competitive prices and the exchange rate in tourism destinations may play a significant role in sustaining the activity,” it said, adding that investments in recent years in several countries have placed them in a better position to compete for the decreasing demand for tourism services expected in the near future.
According to the ECLAC report, tourism’s importance has increased as a generator of value-added and income in the region.
Tourism related exports compose about 20 per cent of Gross Domestic Product (GDP) in the Caribbean.
Tourism expenditures in the English-speaking Caribbean, with the exception of Guyana, Suriname and Trinidad and Tobago, are equivalent to 15 to 41 per cent of GDP. ECLAC also noted that as a proportion of total exports of goods and services, expenditures are even greater, given that tourism is the main source of income and the motor of these economies.