Tourism and Economic Growth in South Asian Countries: Asymmetric Analysis and Lessons for Mitigating the Adverse Effects of Covid-19 Pandemic

Since the first Quarter of 2020, due to the spread of the Covid-19 pandemic, which is still continuing unabated with the periodical emergence of new variants, international tourism has become one of the most adversely affected sources of external earnings of developing countries. The World Travel and Tourism Council has predicted that border closures, as part of travel bans imposed by all affected countries to contain spread of the pandemic combined with the shattered travelers’ confidence, would lead to a loss of 100 million jobs on a global scale in 2021 and 2022 along with an expected fall in world tourism by 60 to 80 percent. For the South Asian countries, the crisis would result in a 42 to 60 percent drop in tourist arrivals in 2020 and 2021. Tourism has also been providing a great impetus to the growth of informal sector supported by information and communication technology with participation of women, both full time and part time, in significant number of small and mini-enterprises. This panel study employing a nonlinear econometric methodology confirms the existence of an asymmetric association between tourism and economic growth for six South Asian countries for the period 1995 to 2018. While a given size of positive partial sum decomposition of tourism increased growth, the negative partial sum decomposition of tourism of the same size resulted in a greater adverse effect on economic growth. There are some lessons of policy implications which are drawn from the study in the context of continuing uncertainties.