Tourism in Africa and economic vulnerabilities to exogenous shocks

Tourism is crucial for job creation, economic development, and poverty reduction, particularly in natural-resource-based economies. Africa, the world's second-most tourism-dependent region, experiences significant revenue fluctuations due to exogenous shocks. This study examines the impacts of a 10 % reduction in African tourism demand, a shock reflecting a relatively common yearly variation observed across African regions but not an extreme event like the global Covid-19 pandemic. Using a global computable general equilibrium model, the analysis reveals substantial welfare losses and pronounced heterogeneity across countries, driven by exchange rate depreciation and higher production costs from imported intermediates. Countries with diversified export bases show greater resilience, highlighting the importance of economic diversification in mitigating adverse effects. These findings stress the need for resilience-building in tourism-dependent economies and offer insights into the interplay between tourism dependency, exogenous shocks, and economic adaptation, improving our understanding of African economies' vulnerability within the global economic context.