Armenia's plan to revive the tourism sector is doomed to be unsuccessful

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Armenia's plan to revive the tourism sector is doomed to be unsuccessful

Comments by Head of department of Center for Analysis of Economic Reforms and Communication Rashad Huseynov

According to the last data of the World Travel and Tourism Council, currently the tourism sector accounts for 11.8 percent of Armenia's GDP, and 12.5 percent of the total country’s workforce are engaged in this sphere. The share of the tourism sector is significantly high in the total volume of exports. Complying with the last statistics, with an export index of 1.3 billion US dollars, the tourism sector accounts for 24 percent of total exports. Thus, it can be said that a quarter of every 100 US dollars coming into the country from export of goods and services is formed precisely in the tourism sector. The development of the tourism sector in Armenia is mainly dependent on foreign tourists. In 2019, 1.9 million tourists visited Armenia.
Most of them came from Russia, the European Union, Iran and the United States. Over the past two years, more than 500 thousand tourists have arrived in Armenia from Russia. In general, the majority of tourists visiting Armenia are people of Armenian origin living abroad.
During 2020, due to the situation caused by the coronavirus (COVID-19) pandemic, the tourism sector in Armenia has received hard blow. Thus, in comparison with last year, the turnover of the tourism sector in Armenia has decreased by more than 90 percent.  Only in the first quarter of 2020, this sector recorded losses of about 135 million US dollars.  The Armenian government predicted a relative revival of the tourism sector in this fall. For this reason, since September of this year, the areas for the provision of tourism services have been declared open to foreign tourists. However, Armenia's attack on Azerbaijan on September 27 and the start of a counterattack by our army also turned the occupying country's plans to develop tourism upside down. Analysis of the latest data shows that after the successful attacks of the Azerbaijani army, the tourism sector of Armenia will not be able to recover for a long time. The matter is that Armenia has already become a very risky country for international tourists. At the moment, only hired soldiers can come to this country from abroad under the name of tourists. 
As noted above, the collapse of the tourism sector will also have a serious negative impact on the formation of the country's foreign trade balance. The continuing lag in this sector suggests that in the near future the pressure on the national currency of the occupying country, the Dram, will increase. As a result, this will lead to a decrease in the value of the Dram in relation to other currencies and increase distrust in the national currency. The lag in the tourism sector also seriously increases the risk for majority of 125 thousand people, working in this sector, to lose their jobs.

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