In February 2016, World Health Organization declared Zika virus outbreak as an international public health emergency across 21 countries in the LATAM and Caribbean region, as Zika is believed to pose a serious threat to human health and life, and to adversely impact businesses and economies. The virus is slowly becoming a great contributor to the financial turmoil by severely affecting tourism industry, one of the key sources of revenue in the region. Zika has recently also become a major hindrance for Brazil Olympics scheduled for August 2016, as athletes and spectators are skeptical of visiting the country due to fears over the virus.

Latin American and Caribbean countries are likely to suffer an estimated economic loss of about US$ 3.5 billion in 2016 due to the Zika outbreak with countries such as Mexico, Argentina, and Brazil blown by the highest fiscal revenue losses in the region. Further, Zika is posing a significant threat to the tourism industry leading to drop in airline bookings to Latin America and Caribbean by 3.4% y-o-y (bookings between January 15 and February 10) in 2016 over 2015. The Caribbean region is hit the worst – airline bookings declined 27% y-o-y in the US Virgin Island and 24% y-o-y in Martinique. Also, shares of travel companies plummeted and several cruise lines, airlines, and hotels are offering fee waivers and options to reschedule travel.

EOS Perspective

Zika has taken a financial toll on the LATAM and Caribbean countries and might continue to weigh them down till it is adequately curbed or vaccinations are introduced. Zika has also become a major threat to the forthcoming Rio Olympics with a few athletes already starting to back out of the games and health experts across the world discussing to cancel/postpone Olympics over public health concerns. However, Brazil is making relentless efforts to ensure safety of athletes and spectators, and the government has given assurance that the virus will not affect visitors. The country is continuously wrestling against the virus by taking measures such as daily inspection of the Olympic site, spraying mosquito repellents, and eliminating mosquito breeding sites and stagnant water. Also, Brazilian government will temporarily waive visa requirements for citizens of the USA, Japan, Australia, and Canada for travel in 2016 (between June 1 and September 18) to entice visitors. All these efforts by the Brazilian authorities are a vivid illustration that amidst the dwindling economy and political instability, Olympics is the much needed lift for Brazil. Tourism is likely to account 10% of Brazil’s GDP in 2016 due to the Olympics, as compared with an average of 9% in previous years.

Regardless of efforts made by countries to curb the virus, travel alerts for LATAM and Caribbean region have already damaged the travel market and put the US$ 64 billion worth tourism industry at risk.