Guesthouses will be worst-hit in Maldives coronavirus tourism slump, World Bank warns

Guesthouse owners and their employees in Maldives will bear the brunt of the economic impact on the island nation’s lucrative tourism industry by the coronavirus pandemic, the World Bank said Sunday.

The worst hit economy in South Asia will be the Maldives, where the collapse of high-end tourism could see its economic output shrink by as much as 13 per cent, warned the World Bank.

“Although tourist arrivals are expected to rebound once the pandemic subsides, the loss in global wealth will dampen worldwide tourism growth, especially the luxury segment,” the latest issue of the World Bank’s bi-annual South Asia Economic Focus report read.

“Unlike previous shocks, when tourism was mostly confined to high-end resort islands, the fallout from the coronavirus pandemic will disproportionately affect the incomes of guesthouse owners and their employees on local islands, as most of the growth in visitor arrivals has occurred in this segment of the tourist market in recent years.”

The World Bank expects the Maldives to have the largest employment losses as a share of total employment if the lockdown drags on due to the high share of tourism in employment, almost 70 per cent.

The analysis by the 189-member global financial institution comes weeks after a local representative body said the Maldives’ guesthouse sector would face losses of some $28.9 million due to the pandemic.

Publishing the results of a survey, Guesthouse Association of Maldives (GAM) said it is uncertain when the outbreak will be contained but the impact on the guesthouse sector will last for at least six months.

Meanwhile, the World Bank has advised governments in South Asia to “ramp up action to curb the health emergency, protect their people, especially the poorest and most vulnerable, and set the stage now for fast economic recovery”.

The World Bank also recommended temporary work programmes for migrant workers, debt relief for businesses and individuals while cutting red tape on essential imports and exports.

Last week the Washington DC-based lender said it would deploy up to $160 billion in financial support over the next 15 months to help vulnerable countries deal with the pandemic and bolster their economic recovery.

A total of $17.3 million has been pledged to the Maldives from the World Bank’s fast-track financing facility to help countries fight the coronavirus pandemic.

The Covid-19 outbreak has hit the Maldivian economy hard, as travel restrictions and other preventive measures affect the country’s lucrative tourism industry, which contributes the bulk of the island nation’s state revenue and foreign reserves.

Before the pandemic, the government had been bullish about tourism prospects, targeting two million, high-spending holidaymakers this year after last year’s record 1.7 million.

However, tourist arrivals saw a year-over-year decline of 22.8 per cent in the first 10 days of March. Officials say the number of tourist arrivals to the Maldives could drop by half in 2020.

With arrival numbers falling and a blanket visa suspension in effect, several resorts across the Maldives had been closed.

Tourism has been the bedrock of the Maldives’ economic success. The $5 billion-dollar economy grew by 6.7 per cent in 2018 with tourism generating 60 per cent of foreign income.

However, the government is at present projecting a possible 5.7 per cent economic contraction this year — an estimated $778 million hit.

On March 8, Maldives reported its first cases of the novel coronavirus, as two hotel employees tested positive for Covid-19 at a luxury resort in the archipelago.

Eighteen more cases — all foreigners working or staying resorts and liveaboard vessels except five Maldivians who had returned from abroad — were later identified.

However, 14 out of the 20 have made full recoveries. Four Maldivian patients are being treated at designated quarantine facilities, whilst two had been repatriated to their home country of Italy.

The Maldives announced a state of public health emergency on March 12, the first such declaration under a recent public health protection law.

The public health emergency declaration has allowed the government to introduce a series of unprecedented restrictive and social distancing measures, including a partial curfew in capital Male and its suburbs, and a nationwide closing of schools, colleges and universities. Non-essential services and public places in the capital such as gyms, cinemas and parks have also been shut.

Restaurants and cafes in the capital have been asked to stop dine-in service and switch to takeaway and delivery.

A nationwide shutdown of all guesthouses, city hotels and spa facilities located on inhabited islands is also in effect.

Photo: Kani Grand

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