Over $1.2 Trillion Could be Lost By Global Tourism Sector Due to COVID-19: UNCTAD
The world’s tourism sector could lose at least 1.2 trillion dollars or 1.5 per cent of the global gross domestic product (GDP) having been placed at a standstill for nearly four months due to the coronavirus pandemic, according to a new report by UNCTAD.
The UN’s trade and development body warned that the loss could rise to 2.2 trillion dollars or 2.8 per cent of the world’s GDP if the break in international tourism lasts for eight months, in line with the expected decline in tourism as projected by the UN World Tourism Organisation (UNWTO).
UNCTAD estimates losses in the most pessimistic scenario, a 12-month break in international tourism, at 3.3 trillion dollars or 4.2 per cent of global GDP.
Tourism is a backbone of many countries’ economies and a lifeline for millions of people around the world, having more than tripled in value from 490 billion dollars to 1.6 trillion dollars in the last 20 years, according to UNWTO. But Covid-19 has brought it to a halt, causing severe economic consequences globally.
Prevailing lockdown measures in some countries, travel restrictions, reductions in consumers’ disposable income and low confidence levels could significantly slow down the sector’s recovery. Even as tourism slowly restarts in an increasing number of countries, it remains at a standstill in many nations.
“These numbers are a clear reminder of something we often seem to forget: the economic importance of the sector and its role as a lifeline for millions of people all around the world,” said UNCTAD’s Director of International Trade Pamela Coke-Hamilton.
“For many countries, like the small island developing states, a collapse in tourism means a collapse in their development prospects. This is not something we can afford,” she added.
Developing countries could suffer steepest GDP losses. But the tourism sector in many rich nations will also feel the squeeze.
Popular European and North American destinations including France, Greece, Italy, Portugal, Spain and the United States could lose billions of dollars due to the dramatic drop in international tourism, according to UNCTAD forecasts.
Travel and tourism account for a significant share of global GDP and more than half of many countries’ national income.
Coronavirus-induced losses in tourism have a knock-on effect on other economic sectors that supply the goods and services travellers seek while on vacation such as food, beverages and entertainment.
UNCTAD therefore estimates that for every 1 million dollars lost in international tourism revenue, a country’s national income could decline by 2 million to 3 million dollars.
The massive fall in tourist arrivals has also left a growing number of skilled and unskilled workers unemployed or with less income.
UNCTAD calls for strengthened social protection in the affected nations to prevent the worst economic hardship for people and communities that depend on tourism.
Governments should also assist tourism enterprises facing the risk of bankruptcy, such as hotels and airlines. One approach for financial relief is low-interest loans or grants, the report states.