Impact of Covid-19 on Tourism: Evidence from SAM Assessments of Hungary and Turkey

Abstract

Due to the Covid-19 pandemic, international mobility was largely restricted, which led to severe declines in tourism activities. This paper estimates the economic impacts of this decline in Turkey and Hungary, using social accounting matrix modeling. The authors constructed social accounting matrices separately and estimated the macroeconomic impact of the decline. The results reveal that the decline in international tourism revenues reduced GDP by 2.6% in Turkey and 5.9% in Hungary, with 0.9% and 2.0% loss of employment in Turkey and Hungary, respectively. These figures are much larger compared to the economic gains from the fiscal rescue packages.

Keywords

• COVID-19
• Tourism
• Turkey
• Hungary
• Social accounting matrix

References

1. Akkemik, K.A. (2012). Assessing the importance of international tourism for the Turkish economy: A social accounting matrix analysis. Tourism Management, 33(4), 790-801.
2. Amewu, S., Asante, S., Pauw, K., & Thurlow, J. (2020). The economic costs of COVID-19 in sub-Saharan Africa: insights from a simulation exercise for Ghana. European Journal of Development Research, 32(5), 1353-1378.
3. Andam, K.S., Edeh, H., Oboh, V., Pauw, K., & Thurlow, J. (2020). Estimating the economic costs of COVID-19 in Nigeria. Strategy Support Program Working Paper No. 63, International Food Policy Research Institute, Washington DC.
4. Asian Development Bank, ADB (2020). Asian Development Outlook 2020: What Drives Innovation in Asia?. ADB, Manila.
5. Baker, S.R., Bloom, N., Davis, S.J., & Terry, S.J. (2020). COVID-Induced Economic Uncertainty. Working Paper No. 26983, NBER.
6. Beckman, J., Baquedano, F., & Countryman, A. (2021). The impacts of COVID-19 on GDP, food prices, and food security. Q Open, qoab005.
7. Beckman, J., & Countryman, A.M. (2021). The Importance of Agriculture in the Economy: Impacts from COVID‐19. American Journal of Agricultural Economics, forthcoming.
8. Binder, C. (2020). Coronavirus Fears and Macroeconomic Expectations. Review of Economics and Statistics¸ 102(4), 721-730.

9. Cardenete, M.A., Guerra, A.I., & Sancho, F. (2017). Applied general equilibrium: An introduction. Heidelberg, Springer.
10. Çakmaklı, C., Demiralp, S., Kalemli Ozcan, S., Yesiltas, S., & Yildirim, M. (2020). COVID-19 and Emerging Markets: An Epidemiological Model with International Production Networks and Capital Flows (July 1, 2020). IMF Working Paper No. 20/133
11. Coibion, O., Gorodnichenko, Y., & Weber, M. (2020). The Cost of the Covid-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending. Working Paper No. 27141, NBER.
12. Cui, Q., He, L., Liu, Y., Zheng, Y., Wei, W., Yang, B., & Zhou, M. (2021). The impacts of COVID-19 pandemic on China's transport sectors based on the CGE model coupled with a decomposition analysis approach. Transport Policy, 103, 103-115.
13. Çetin, D., & Erdil, E. (2021). "Infernum": Economic Impacts of the COVID-19 Pandemic on the Health Tourism Industry – A Snapshot. In: M. Demir, A. Dalgıç, F. Doğanay Ergen (eds.), Handbook of Research on the Impacts and Implications of COVID-19 on the Tourism Industry, IGI Global, pp. 115-134.
14. Demir, M., Dalgıç, A., & Doğanay Ergen, F. (2021). Handbook of Research on the Impacts and Implications of COVID-19 on the Tourism Industry. IGI Global.
15. Diao, X., Aung, N., Lwin, W.Y., Zone, P.P., Nyunt, K.M., & Thurlow, J. (2020). Assessing the impacts of COVID-19 on Myanmar's economy: A Social Accounting Matrix (SAM) multiplier approach. Strategy Support Program Working Paper No. 1, International Food Policy Research Institute, Washington DC.
16. Dibo, M. (2021). The Effects of COVID-19 on Turkey's Tourism Economy: An Assessment Within the Scope of Employment and Tourism Revenues. In: M. Demir, A. Dalgıç, F. Doğanay Ergen (eds.), Handbook of Research on the Impacts and Implications of COVID-19 on the Tourism Industry, IGI Global, pp. 226-246.
17. Dietrich, A.M., Kuester, K., Muller, G.J., & Schoenle, R.S. (2020). News and uncertainty about COVID-19: Survey evidence and short-run economic impact. Working Paper No. WP 20-12, Federal Reserve Bank of Cleveland.
18. Elgin, C., Basbug, G., & Yalaman, A. (2020). Economic Policy Responses to a Pandemic: Developing the COVID-19 Economic Stimulus Index. Covid Economics: Vetted and Real Time Papers, 3, 40-54.
19. Eppinger, P., Felbermayr, G., Krebs, O., & Kukharskyy, B. (2020). Covid-19 Shocking Global Value Chains. Working Paper No. 8572, CESifo.
20. Eugenio-Martina, J.L., & Campos-Soria, J.A. (2014). Economic crisis and tourism expenditure cutback decision. Annals of Tourism Research, 44, 53-73.
21. Eurostat (2013). Tourism Satellite Accounts in Europe: 2013 edition. Eurostat, Luxembourg.
22. Eurostat (2019). Tourism Satellite Accounts in Europe: 2019 edition. Eurostat, Luxembourg.
23. Fotiadis, A., Polyzos, S., & Huan, T.C.T. (2021). The good, the bad and the ugly on COVID-19 tourism recovery. Annals of Tourism Research, 87, 103117.
24. Gössling, S., Scott, D., & Hall, C.M. (2020). Pandemics, tourism and global change: a rapid assessment of COVID-19. Journal of Sustainable Tourism, 29(1), 1-20.
25. Guan, D., Wang, D., Hallegatte, S., Davis, S.J., Huo, J., Li, S., Bai, Y., Lei, T., Xue, Q., Coffman, D.M., & Cheng, D. (2020). Global supply-chain effects of COVID-19 control measures. Nature Human Behaviour, 4, 577-587.
26. Guerrieri, V., Lorenzoni, G., Straub, L., & Werning, I. (2020). Macroeconomic Implications of COVID-19: Can Negative Supply Shocks Cause Demand Shortages? Working Paper No. 26918, NBER.
27. He, X., Balistreri, E.J., Kim, G.H., Xiong, T., & Zhang, W. (2021). A General Equilibrium Assessment of COVID-19's Labor Productivity Impacts on China's Regional Economies. Working Paper No. 21-WP 617, Iowa State University, Center for Agricultural and Rural Development.
28. International Monetary Fund, IMF (2020). World Economic Outlook, April 2020.
29. Korinth, B. (2021). The impact of political decisions on the tourist accommodation occupancy – Central Europe in the time of the COVID-19 pandemic. Geographia Cassoviensis, 15, 27-36.
30. Maliszewska, M., Mattoo, A., & Van Der Mensbrugghe, D. (2020). The potential impact of COVID-19 on GDP and trade: A preliminary assessment. World Bank Policy Research Working Paper No. 9211, World Bank.
31. Mariolis, T., Rodousakis, N., & Soklis, G. (2021). The COVID-19 multiplier effects of tourism on the Greek economy. Tourism Economics, forthcoming.
32. McKibbin, W., & Fernando, R. (2021). The global macroeconomic impacts of COVID-19: Seven scenarios. Asian Economic Papers, forthcoming.
33. OECD (2020). Mitigating the impact of COVID-19 on tourism and supporting recovery. OECD Tourism Papers, 2020/03, OECD Publishing, Paris.
34. Özatay, F., & Sak, G. (2020). Covid-19’un ekonomik sonuçlarını yönetebilmek için ne yapılabilir? Report no. N202006, TEPAV.
35. Pham, T.D., Dwyer, L., Su, J.J., & Ngo, T. (2021). COVID-19 impacts of inbound tourism on Australian economy. Annals of Tourism Research, 88, 103179.
36. Polyzos, S., Samitas, A., & Spyridou, A.E. (2021). Tourism demand and the COVID-19 pandemic: An LSTM approach. Tourism Recreation Research, forthcoming.
37. Porsse, A.A., de Souza, K.B., Carvalho, T.S., & Vale, V.A. (2020). The economic impacts of COVID‐19 in Brazil based on an interregional CGE approach. Regional Science Policy & Practice, 12(6), 1105-1121.
38. Pradesha, A., Amaliah, S., Noegroho, A., & Thurlow, J. (2020). The cost of COVID-19 on the Indonesian economy: A Social Accounting Matrix (SAM) multiplier approach. Strategy Support Program Policy Note, International Food Policy Research Institute.
39. Raffay, Z., (2021) A COVID-19 járvány hatása a turisták fogyasztói magatartásának változására (The impact of the COVID-19 pandemic on the change of consumer behavior of tourists). University of Pécs. Retrieved in January 15, 2021 from https://ktk.pte.hu/hu/karunkrol/intezetek/marketing-es-turizmus-intezet/covid-kutatas-2020/jarvanyidoszak-alatti
40. Sharma, G.D., Thomas, A., & Paul, J. (2021). Reviving tourism industry post-COVID-19: A resilience-based framework. Tourism Management Perspectives, 37, 100786.
41. Škare, M., Soriano, D.R., & Porada-Rochoń, M. (2021). Impact of COVID-19 on the travel and tourism industry. Technological Forecasting and Social Change, 163, 120469.
42. Taymaz, E. (2020). Covid-19 tedbirlerinin ekonomik etkileri ve politika önerileri. Retrieved in May 24, 2020 from http://sarkac.org/2020/03/covid-19-tedbirlerinin-ekonomik-etkileri-ve-politika-onerileri
43. Thorbecke, E. (2000). The use of social accounting matrices in modelling. Paper presented at the 26th General Conference of the International Association for Research in Income and Wealth, Krakow, Poland.
44. Timmer, M.P., Dietzenbacher, E., Los, B., Stehrer, R., & de Vries, G.J. (2015), An illustrated user guide to the World Input-Output Database: the case of global automotive production. Review of International Economics, 23, 575-605.
45. Uğur, N.G., & Akbıyık, A. (2020). Impacts of COVID-19 on global tourism industry: A cross-regional comparison. Tourism Management Perspectives, 36, 100744.
46. UNWTO (2020). International Tourism Highlights 2020.
47. Várhelyi, T., & Árva, L. (2020) Toward Complex and Sustainable Tourism in Hungary. Polgári Szemle: Gazdasági és Társadalmi Folyóirat, 16 (Spec.), 85-102.
48. West, G., & Gamage, A. (2001). Macro effects of tourism in Victoria, Australia: A nonlinear input-output approach. Journal of Travel Research, 40(1), 101-109.
49. Xu, J., & Wei, W. (2021). The effects of tax and fee reduction policy on mitigating shock of the COVID-19 epidemic in China. Applied Economics, forthcoming.
50. Zhang, H., Song, H., Wen, L., & Liu, C. (2021). Forecasting tourism recovery amid COVID-19. Annals of Tourism Research, 87, 103149.
51. Zhang, Y., Diao, X., Chen, K.Z., Robinson, S., Fan, S. (2020). Impact of COVID-19 on China's macroeconomy and agri-food system–an economy-wide multiplier model analysis. China Agricultural Economic Review, 12(3), 387-407.