Extreme Outlier: The Pandemic’s Unprecedented Shock to Tourism in Latin America and the Caribbean
The COVID-19 crisis will have devastating implications for countries around the world, particularly tourism-dependent economies. This paper highlights the vulnerability of many Latin American and Caribbean countries, that are among the most dependent in the world on the tourism sector. Using shock simulations applied to activity in the tourism sector, it highlights how potentially damaging the pandemic could be for output, employment, and the balance of international payments across the region. The analysis suggests the pandemic is likely to imply an unprecedented shock, and that governments will have to look beyond traditional policy tools to safeguard their economies and citizens, and to ensure that the tourism sector both operators and those employed by the sector will be in a position to resume its substantial contribution when the crisis dissipates. COVID-19 represents an unprecedented extreme outlier event, and government efforts to protect the sector and their citizens must be equally unparalleled.