IMF: Dramatic fall in tourism sliced 1pp off Turkey's 2016 growth

By bne IntelliNews February 24, 2017

The International Monetary Fund said on February 23 that the dramatic decline in foreign tourist arrivals experienced by Turkey took a percentage point of GDP from the country's economic growth last year.

Across 2016, Turkey’s tourism industry suffered gravely from anxieties caused by a series of terrorist attacks, geopolitical risks and tensions with Russia that led to restrictions on charter flights and sales of travel packages.

Foreign tourist arrivals plunged 30% to 25.35mn last year while the country’s average hotel occupancy rate fell to a European low of 50.8% from 61.7% in 2015. The IMF estimates that for Turkey a 10% decline in foreign arrivals translates into a 0.3-0.5 percent fall in GDP.

Tourism revenues, which help Turkey to finance its large current account deficit, declined to $13.7bn in 2016 from $21.3bn in 2015.

The dwindling number of visitors also hurt sectors which dovetail with tourism, the IMF noted in a press release.

“Just before 2016, Turkey grew into one of the most popular tourist destinations in the world. The growing network of the national air carrier, infrastructure development, hotel construction, and country marketing fuelled the expansion,” the Fund said.

It also observed that prior to 2016 thriving tourism brought in revenues equivalent to 3.7% of GDP and generated 600,000 jobs, or 2.3% of total employment.

Reflecting the impact on employment of the troubles affecting the tourism industry and wider problems endured by the Turkish economy, the country’s jobless rate hit a seven-year high of 12.1% in November last year.

“The turn came in 2016, with a sharp rise in terrorist attacks coupled with political uncertainty. Terrorist attacks - 400 in just 2015 from an average of 70 annually between 2010 and 2014 - resulted in a more than a 30% fall in the number of European tourists who used to make up over half of the visitors,” the Fund said.

The IMF expects the tourism recovery in Turkey to be slow “as repeated incidents of violence tend to have long-lasting effects on tourist arrivals”.

The government forecasts that tourism revenues will increase to $23.5bn this year.

The Fund said earlier this month that the Turkish economy is set to grow at below-potential this year and in 2018 due to a combination of a number of negative political and economic factors.

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