BlackRock Investment Institute

Macro insights

Tracking travel

New Covid-19 strains have stirred unease for their potential to spread more easily or lower the efficacy of vaccines. Yet recent developments around the new variants are unlikely to challenge the 2021 economic restart, in our view.

Travel controls
Contribution of tourism to economy, February 2021

Chart showing Spain, France and Italy with the highest share of tourism in output

Sources: BlackRock Investment Institute, with data from  the OECD, February 2021. Notes: The orange bars show the contribution of tourism to overall economic output. The yellow bars show whether countries are net exporters or importers of tourism. The bars  represent revenue from foreign tourists minus spending by individuals abroad. A positive number means a country receives more in tourism revenue from overseas visitors than its own citizens spend on tourism abroad.

First, most existing vaccines appear to be effective against the variants, especially in preventing hospitalizations – key to the economic restart. Second, any near-term disruptions will likely be followed by a faster activity restart later. But over the longer term these Covid-19 variants do suggest some targeted restrictions on activity will likely remain in place. One example: international travel controls.

Vaccine certificates, being considered in the UK and Denmark, may allow travel to happen. We expect economies reliant on tourism to take longer to see holidaymakers return to pre-Covid levels. Countries such as Spain, France and Italy have positive net tourism earnings : they earn more from foreign tourists than they lose from domestic tourists abroad. See the yellow bars. These countries may find it harder to make up for lost revenue from foreign tourists with domestic ones.

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