Swedbank: Uncertainty undermining tourism sector's recovery

One of three viewing platforms in Toompea in Tallin's Old Town.
One of three viewing platforms in Toompea in Tallin's Old Town. Source: (Siim Lõvi/ERR)

The recovery of Estonia's tourism sector is undermined by insecurity, distancing requirements and limited transport opportunities, Tõnu Mertsina, chief economist at the Estonian operation of Swedbank, said in his comments on the data on accommodated tourists for April.

Statistics Estonia said on Friday that a total of 13,000 tourists stayed in accommodation establishments in Estonia in April 2020, 95 percent less than in April 2019.

Mertsina said even though movement restrictions between the Baltic countries were lifted in mid-May and from the beginning of June people from 24 European countries can travel to Estonia, this does not automatically mean an increase in domestic tourism or foreign tourist numbers.

"It should be taken into consideration that people's insecurity when it comes to travel continues to be high, distancing requirements apply in accommodation establishments and transport opportunities are fewer still than they were before," he said.

"Probably a part of the workforce that used to be employed in accommodation will be left without a job after the end of the remuneration compensation and may move to other fields of activity later," Mertsina said.

The chief economist at Swedbank observed that in April, a decline of 14 percent in employment relationships was registered in Estonia compared with the same month last year and the decline was as steep as by one-fifth in May.

The wage compensation measure of the Unemployment Insurance Fund only holds back a faster rise in the numbers of unemployed people, but does not prevent it, he said. 

In accommodation, the turnover of bankcard payments dropped 79 percent on year in May.

Mertsina said while the direct impact of the accommodation sector on the economy is small, the tourism sector as a whole has a major impact on the performance of the economy.

"The share of accommodation in Estonia's GDP has been only 0.7 percent in recent years and its contribution to GDP growth has been generally close to zero. In the first quarter of this year the share of accommodation in GDP declined even to 0.5 percent. Even in the event of a strong reduction in value added is the direct impact of accommodation on the decline in GDP as a whole not big. At the same time, accommodation is just a part of the tourism sector, which makes up an estimated about 8 percent of the Estonian economy," Mertsina said.


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Editor: Helen Wright

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