Beautiful Virgin Islands

Tuesday, Jun 03, 2025

UN study says tourism-rich small island states like BVI could see massive GDP fallout from COVID

UN study says tourism-rich small island states like BVI could see massive GDP fallout from COVID

A new United Nations study has shown that Small-Island Developing States (SIDS) like the BVI, that rely heavily on tourism, could experience a staggering dip in their overall Gross Domestic Product (GDP) due to impacts from the COVID-19 pandemic.

The study, which was published by the United Nations Conference on Trade & Development on July 1, found that the interconnectedness of tourism to other sectors such as health, financial, construction, trade, air transport and communication will result in a multiplier effect throughout the economy.

“Intersectoral linkages worsen the impact of a decline in tourism. A fall in tourist arrivals has a negative impact on the suppliers to hotels, food and recreational activities. The more connected the sector is, the stronger the impact of a negative shock in the tourism industry,” the report said.

“Findings show that the losses in GDP are approximately two to three times higher. As a result, a $1 million loss in international tourist revenue can lead to a fall in national income of $2-3 million. It is these intersectoral linkages and corresponding losses which lead to the large indirect losses when the tourism sector contracts.”

To put that into perspective, the latest known reported figures on local tourism shows that visitors spent an estimated $484 million in the territory in 2016. This is equivalent to 52 percent of the BVI’s GDP.


SIDS vulnerable due to characteristics

The UN, in the meantime, further said that due to the common characteristics of SIDS, it puts SIDS like the BVI in a more vulnerable position, since they have limited alternative options available to generate revenue from.

These characteristics include small domestic markets, a low degree of export diversification and remoteness.

“As a result, these economies are highly vulnerable to external shocks and thus, are among the most impacted by COVID-19. It is anticipated that the economic blow to SIDS will result in record amounts of revenue losses without the alternative sources of foreign exchange revenues necessary to service external debt and pay for imports,” the report explained.

The World Travel and Tourism Council anticipates that the international tourism sector will likely return to pre-pandemic levels within 19 months.

Tourism is one of two major economic pillars for the BVI. It directly accounts for one in every four jobs. The other pillar is the financial services sector.

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