Tourism earnings sputter through June amid deepening forex crisis

The earnings from the tourism trade, which took a severe battering since April this year, fell to a third of what it brought prior to the full-blown economic crisis started unravelling, deepening the shortages of foreign exchange badly needed by the country just to keep its economy running. 

According to the Central Bank data, Sri Lanka received just US $ 59.1 million from tourism in June, slightly up from US $ 54.3 million earned in May but less than a third from US $ 191.5 million generated in March when the country’s economy started to unravel, with the free fall in the rupee, giving rise to hyperinflation, deepening the fuel and other shortages and the rolling power cuts, which continue to date.

Tourism is Sri Lanka’s second largest services inflow in its balance of payment (BoP) after worker remittances and the trade was thrice crushed by the triple whammy of events from the Easter attacks in 2019 to the two years of the pandemic in 2020 and 2021 to the worst economic crisis in 2022, which precipitated into political and social disorder. 

At its peak in 2018, Sri Lanka earned US $ 4.8 billion from tourism with another US $ 7.0 billion coming annually from remittances, which together pretty much took care of the roughly US $ 10 billion deficit in the trade account. 
Yet, the decimation of the former and the fading of the latter, all during the pandemic, brought Sri Lanka into its current economic standstill, as the then authorities didn’t hear the calls nor took pre-emptive measures to make up for the gap through other means while the soaring global inflation was taking a severe toll on the BoP. 

Sri Lanka’s tourism was off to a fine start in January, generating US $ 268.3 million in earnings, a post-pandemic high. 

But the arrivals, which reached a post-pandemic peak of 106,500 in March, fell by a third to 32,856 in June, despite an increase from 30,207 in May, as travel advisories were slapped against Sri Lanka amid a spate of violence that erupted. However, provisional data available through July 17 pointed to an improvement in the arrivals, with the first three weeks bringing in over 25,000 visitors. 

With the June numbers, Sri Lanka had earned a cumulative US $ 739.8 million from tourism from a total of 411,377 visitors in the first six months of 2022.