Effects of COVID-19 on Adriatic and Continental Croatia tourism: a regional input-output perspective

Abstract

The purpose of this article is to estimate regional economic impact of tourism in Croatia. Rich cultural heritage and natural resources are factors which have contributed to the rapid increase in tourist arrivals in Adriatic Croatia, especially after the removal of all barriers to free movement following Croatia’s admittance to the European Union. While tourism is one of the key sectors which has contributed to Adriatic Croatia’s growth and development, a high share of tourism in gross value added and employment has increased the region’s vulnerability to external shocks, such as the outbreak of COVID-19 pandemic in 2020. The estimation of tourism’s role in Croatia’s regions is based on the regional input–output model, which identifies total effects of tourist demand. Results of the study reveal structural differences in Croatia’s regional growth path. While Continental Croatia specialises in more sophisticated industrial sectors, the economy of the Adriatic region is strongly dependent on tourism. The decrease in tourist arrivals due to COVID-19 travel restrictions resulted in a significant decline in economic activity in Adriatic Croatia. Economic activity in the hospitality sector was most affected by decreased demand, but other sectors which deliver inputs required for tourism services were also significantly impacted.