By: Staff Writer
February 19, 2021
Fitch, the international ratings agency, is predicting slow tourism growth for 2021 for the Caribbean and Central America.
They said: “Current account deterioration was largely contained in 2020 despite plunging tourism revenue, thanks to a bump in inbound remittances and a drop in import demand in the Central America, Mexico and Caribbean sovereigns we rate, says Fitch Ratings in a dashboard published today. Timely external borrowing preserved external liquidity in most regional sovereigns. Recovery of the key foreign-currency tourism sector will be likely plod upward than roar back in 2021.”
The slow deployment of coronavirus vaccines in source markets heralds a slow tourism and economic recovery in 2021. Fitch expects average foreign tourist arrivals in 2021 to remain 55 percent below their 2019 levels. Global GDP will rebound by 5.3 percent in 2021 following a 3.7 percent contraction in 2020, and travel will pick up in the second half of 2021. Central America, Mexico and the Caribbean’s tourism FX receipts collapsed 57 percent on average year-to-date in 2020 according to available data. Following border closures during April-June in several countries, tourism’s recovery in the second half of 2020 was only partial, with visitors down 45 percent-75 percent yoy in the final months of 2020. Cruise activity has halted.
They also predict, “Robust remittance receipts growth (11% percent yoy on average 2020/2019) across the Dominican Republic, El Salvador, Guatemala, Jamaica, Mexico and Nicaragua supported consumption and FX receipts. Second-round developed-market stimuli during 2021 supports Fitch’s expectation of further remittance growth this year. Manufactured and metals exports rose in Central America and Mexico during second-half 2020. Import demand also collapsed across Central America and the Caribbean last year. These factors forestalled dramatic current account deterioration in most countries, except Aruba. Governments with market and multilateral access or historical bilateral partnerships were able to shore up their external liquidity with foreign borrowing.”