The unprecedented COVID-19 pandemic has caused disruptions to global trade, business, and education and is estimated to cost the world economy a staggering $1Trillion. The COVID-19 health crisis has disturbed the entire balance of supply and demand side of the market and has hampered the supply chain in most of the economy generating sectors. The economic consequences of the Covid-19 outbreak are tough to handle as the entire of the global supply chain has been interrupted due to worldwide transportation shutdown. Bangladesh is equally affected by this contagion.
Due to the COVID-19 crisis being declared as a pandemic in March 2020 by the World Health Organization (WHO), every country in the world has at least some restriction on travel, including enhanced border and biohazard controls. Bangladesh too has suspended non-essential international travel along with suspension of domestic flights. The global travel and tourism industry which was predicted to be worth over USD 700 billion in 2020 has been hit severely by the Covid pandemic and it is now forecasted to be USD 447 billion. While there will be a significant impact on the livelihood of workers in the formal economy, there can be no doubt that the tourism related informal sector will be hit even harder. In addition, Tourism Economics has predicted that in South Asian countries such as Bangladesh there will be a 30% decline in annual growth of inbound travel by regions, considering an 8-month impact period. Due to the Covid crisis hundreds of travel and tour companies are on the verge of closing temporarily or permanently and a significant number of small hotels, motels, resorts and restaurants are already shut down. With lockdown in effect across the whole country, tourism is the most badly hit sector.
Domestic tourism, which constituted a major component of tourism is Bangladesh is completely at a standstill. With international travel restriction likely to be continued in the near future, there is a possibility of no international tourists arriving in Bangladesh for a considerable period. As per studies conducted by Pacific Asia Travel association (PATA) Bangladesh chapter, there is a loss of 6 BDT billion in the aviation sector and 15 billion BDT in the hospitality sector.
Mitigative actions and responses by Government of Bangladesh (GoB)
In the initial stages, considering the current situation created by the pandemic and its subsequent effect on the rising number of jobs lost and salary cuts, the Hon. Prime Minister of Bangladesh announced a bailout/stimulus package of Tk 5,000 crore (equivalent of USD 0.6 billion) for export-oriented industries to mitigate the impact of the coronavirus on the country’s economy.
Further, Bangladesh has announced a USD 11.6 billion stimulus package to support the economy, with a primary focus on manufacturing and service sectors, agriculture and social safety nets. Within this package, the government has designated BDT 300 billion (approx. USD 3.5 billion) solely for banks to provide working capital loan facilities to affected industries such as tourism and an additional BDT 200 billion (approx. USD 2.4 billion) to bridge financing of the working capital of small and medium sized industries. The stimulus package even though commendable; are unlikely to prove aggressive enough to fight the impact of Covid-19 on the tourism industry in Bangladesh.
Way forward to address the crisis
IPE Global Ltd. has been entrusted to prepare the Tourism Master Plan for Bangladesh. The objective of the master plan is to provide a roadmap for sustainable tourism development in the country over the next 20 years. The master plan would be supplemented by short-term, medium term and long-term action plans which would act as the blueprint for the planned development of the tourist sites utilising country’s tourism resources. As such, the consultant team was engaged in site visits and stakeholder consultations in March 2020 having conducted stakeholders’ workshop in Dhaka as well as on-site.
However, the Covid-19 pandemic forced the field work to be halted and owing to the subsequent lockdown the consultants too had to return to their respective countries.With baseline evaluations and analyses being in a very nascent stage, it was very challenging to assess the impact of Covid crisis on tourist projections and sectoral outcomes. It should also be acknowledged at this juncture that the aberrations caused in tourism trends due to the crisis would have a significant influence on forecasts and proposed scenarios.
In totality, most forecasts suggest it will take 3-7 years for tourism to recover to pre-COVID-19 levels, with some (e.g. IATA) suggesting that post-crisis growth will even accelerate, resulting in tourism overtaking the pre-crisis trajectory within 10 years. Hence, it is an opportunity for emerging economies like Bangladesh to tap into the new trends by not relying only on organic growth but focusing on those demand-led market segments in which it can add value and differentiate itself from comparable destinations. As an attempt to survive among the fittest, Bangladesh needs extensive capacity building programme and a well thought recovery plan to the upcoming changed demand in the future.
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