In November 2020, Croatia observed a fall in tourist arrivals by -76.2% and a fall in tourist nights by -53.8%.
As 2020 is coming to an end it is worth looking at the latest report of the Croatian National Tourist Board for November 2020, which shows a decrease in arrivals of 76.2% and a decrease in tourist nights by 53.8%.
To be specific, Croatia noted 95.2k arrivals in November, compared to 400k in November of 2019. Of total arrivals witnessed in November, foreign tourists account for 35.5k or 37.3%. Such figures show a decrease in foreign arrivals of 86.4%, which could be attributed to the continued increase in number of Covid-19 cases throughout Europe. Such development of the pandemic led to increased restrictions and a further halt in travel as evidenced by these figures.
Moving on to tourist nights; in November Croatia observed 472.4k tourist nights compared to 1.02m in November of 2019. Such figures indicate that the average stay per person increased from 2.6 nights to 5 nights. When looking at solely foreign tourists, average stay per person amounted to 6.8 nights on average, compared to 2.5 nights. This comes as no surprise, as tourists remained longer at one place, rather than traveling to multiple destinations due to the travel restrictions imposed. Of total tourist nights realized, foreign tourists account for 242k or 51.2%. Of that, tourists from Slovenia lead the list, accounting for 7.7% of total nights.
If we were to observe the figures since the beginning of the year, so far 7.69m arrivals were recorded representing a decrease of -62.1%. Meanwhile tourist nights reached 54.1m by the end of November (-49.8% YoY). We note that such figures have outperformed the initially announced estimates of the government, which were published during lockdown.
When observing the arrivals realized in November by counties, Kvarner leads the list with 15.57% of the total arrivals and most tourist nights, 16.5%. Turning our attention to the type of accommodation, one can observe that hotels observed a 82.4% decrease in arrivals to 53.2k, while nights realized in hotels stood at 113.2k (-79.6%).
December figures are expected to weigh-down on 2020 annual statistics as further restrictions in efforts to prevent the spread of the virus in Croatia and Croatia’s inbound tourist countries are evidenced. By looking at the latest announcement from the Tax Administration of the Republic of Croatia, being tracked for Covid-19 pandemic purposes, in the period from 30 Nov till 6 Dec 2020 the value of taxable invoices in accommodation and food services decreased by 78% YoY compared to the same week last year. If we were to compare it on a WoW basis, the value of invoices in accommodation and food services has decreased by 57% or HRK 73.4m. Stricter epidemiological measures concerning territory of whole Croatia that prohibits working of bars and restaurants and other catering facilities, excluding hotels and camps, came into force on 28 Nov 2020.
S&P projects that Romania’s economy will contract by 5.2% in real terms in 2020 and that the fiscal deficit will widen to 9.2% GDP.
Standard & Poor’s Global Ratings maintained Romania’s rating at BBB-/A-3, with a negative outlook, and warned that the country’s economic situation could deteriorate further if policymakers fail to produce a credible plan to lower fiscal imbalances.
Despite deteriorating in 2020, Romania’s government and external debt stocks remain moderate. Moreover, S&P anticipates that the government that assumes office after the December general election will reduce fiscal imbalances. They believe that any incoming administration is likely to continue to provide ample fiscal support to foster economic recovery through 2021. That said, it would have to deal with, and potentially roll back, fiscal rigidities created through previous policy decisions. These include costly hikes to pensions and other social benefits. Policy uncertainty is exacerbated by the confrontational and complex political landscape, which could make it difficult to build a coalition after the December elections.
S&P estimates that Romania’s output will contract by 5.2% in 2020. Although the firm lockdown measures employed over the year took a significant toll on full-year domestic demand, primarily in Q2, the construction sector has recorded solid performance for nine months, partly because Romania maintained its level of public investments. Weak external demand from key trading partners will eat into exports, of which over 20% go to Germany and 10% to Italy. Both countries also face deep recessions in 2020. The forecast remains sensitive to the uncertain epidemiological situation and the possibility of fresh containment measures. S&P projects Romania’s economic activity will recover in 2021, with real GDP growing by 4%. However, they anticipate that the economy will return to its 2019 level only by 2022.
S&P continues to regard Romania’s EU membership as an important policy anchor. Together with the policy choices of the incoming government, the fiscal stimulus forthcoming at the supranational level will be key to shaping Romania’s macroeconomic rebalancing. Romania will be a strong beneficiary of the structural funds designated under the EU’s upcoming Multiannual Framework, alongside the newly created EU Recovery and Resilience Fund (RFF). The grants portion alone under the RFF equals about 6% of Romanian 2019 GDP, and a similar amount in loans is available to unlock access to cheap financing. Should the funds be fully deployed and successfully absorbed, it would help sustain Romania’s growth prospects, facilitating the budgetary rebalancing that we envision in our base case for 2021-2023.