Struggling tourism nations may require two more years to achieve full recovery, according to Moody's analysis.
In a recent analysis, Moody's has forecasted a gradual recovery for tourism-dependent economies, with real GDP growth anticipated to reach around 4% in 2025. However, full recovery to pre-pandemic levels could take longer, as indicated by slower-than-expected enplanement recovery and sector-specific challenges.
The sub-Saharan Africa region, in particular, is expected to face a prolonged recovery period due to the ongoing impact of the Covid-19 pandemic on public accounts. Moody's has given the region a Negative Outlook, suggesting a likelihood of further downgrades. Tourism-dependent economies in this region, such as those in Angola, Mozambique, and Ethiopia, are among those with a Negative Outlook.
Despite these challenges, the economic production of emerging markets, including sub-Saharan Africa, is recovering this year, although it may not reach pre-pandemic levels until 2022. This economic recovery is aiding in avoiding financial defaults in the region.
Several initiatives have been taken to support African countries during this challenging time. These include reducing debt payments, extending the Debt Service Suspension Initiative (DSSI) until December, and instituting a Common Framework for the Debt Treatment beyond the DSSI.
However, credit pressure indicators in emerging markets and companies operating in these markets remain high. In 2020, the real GDP of emerging countries that are part of the G20, excluding China and Turkey, fell by an average of almost 6%.
Giulia Pellegrini, an analyst from Allianz insurance company, has spoken about the sub-Saharan Africa region in a focused analysis. Despite the region's challenges, she notes that the economic recovery in sub-Saharan Africa countries is aiding in avoiding financial defaults.
It's important to note that while many countries have temporarily reduced payments to help alleviate financial pressure, several have not joined due to concerns about potential financial rating downgrades. This underlines the complexities and challenges faced by countries in the region as they navigate their way towards full economic recovery.
In specific locations like New York City, despite strong initial tourism rebounds—such as hotel occupancy and revenues—some signs of recent weakening have emerged, like declines in Broadway theater attendance and revenues falling below pre-pandemic levels as of mid-2025. This exemplifies the nuanced, uneven nature of tourism recovery observed in Moody’s reports.
In summary, Moody’s expects tourism-dependent economies to recover gradually over the next couple of years with GDP growth around 4% in 2025, but full recovery to stable passenger and tourism activity levels could take longer. The sub-Saharan Africa region, in particular, is expected to avoid new financial defaults in 2021, but its recovery may be slower than anticipated due to ongoing difficulties in enplanement recovery and sector-specific challenges.
Eco-tourism business in sub-Saharan Africa countries may provide a stabilizing force for the region's economy, contributing to the avoiding of financial defaults as suggested by Giulia Pellegrini. The finance sector, however, remains under significant pressure, with credit indicators remaining high even during the economic recovery in 2021.
