The Impact of COVID-19 on international tourism in Mexico

Abstract

COVID-19 compelled the implementation of prolonged confinements to limit human contact, and the consequences were devastating for the tourism industry. This study estimates the direct and indirect effects of COVID-19 on tourism in Mexico by constructing three counterfactuals of international tourists and their average expenditure using time series models and the pre-pandemic expectations of economic analysts. Econometric univariate and auto-regressive distributed lag models were employed to estimate the direct impact of COVID-19 on the sector, and input–output multipliers were utilized to assess the indirect and total effects of the shock on the economy. Estimates indicate that the impact of COVID-19 from March to December 2020 caused a loss of approximately US$15 billion in international tourism revenues, indicating a 15% decline in tourism gross domestic product (GDP) and the loss of one-fifth of the tourism workforce. In 2020, international tourism alone could have contributed one-eighth to the Mexican economy’s collapse.