Tourism explains 75% of the historic fall in GDP in 2020

  • ECO News
  • 14 May 2021

The collapse of tourism activity in Portugal due to the pandemic constraints explains three-quarters of the historic 7.6% fall in GDP in 2020, according to INE.

It was already known that the fall in tourism activity last year had a significant impact on the Portuguese economy. But now it is possible to say what the exact impact on GDP is. According to Statistics Portugal (INE), the tourism slump in 2020 explains 75% (-5.8 p.p) of the 7.6% contraction in the country’s gross domestic product, the largest in democracy.

“Applying the Integrated System of Symmetric Input-Output Tables of 2017 to the main results of the Tourism Satellite Account (TSA), it is estimated that the tourism activity has generated a direct and indirect contribution of 12.8 billion euro to the GDP nominal value in 2020, which corresponded to 6.3% (11.8% in 2019) of national GDP,” the statistics office reveals this Friday, adding that “Using the same analytical referential, it is estimated that for the rate of change, in volume, of national GDP (-7.6%), the reduction in tourism activity contributed by around ¾ of the total.”

These figures show that tourism’s contribution to national GDP halved from 2019 to 2020 because of the constraints, which confirms what the monthly figures for tourism activity were already showing. After a decade of vigorous growth, tourism activity has collapsed, mainly among non-residents.

“The products which most contribute to the tourism GDP, such as accommodation, food and beverage serving, transport (especially air transport services) and rental and leasing services, were the ones which suffered the most from the economic impacts of the COVID-19 pandemic, which resulted in reductions, in volume, between 48% and 55% in the tourism GDP generated by these activities,” INE explains.

Statistics Portugal’s data also shows that the Gross Value Added generated by Tourism (GVAGT) decreased 48.2% compared to 2019, which “compares with the 4.6% reduction in the national economy GVA.” Thus, the GVAGT now accounts for 4.6% of national GVA in 2020 (8.4% in 2019).

Tourism Consumption in the Economic Territory (TCET) declined by 50.4%, “while the Gross Domestic Product (GDP) decreased by 5.4%, with an unprecedented reduction of the inbound tourism expenditure (tourism exports).” This indicator now represents 8% of GDP in 2020 (15.3% in 2019).