The coronavirus will cost world tourism between 1.2 and 3.3 billion dollars
The global tourism sector could lose between $1.2 and $3.3 trillion from the VID-19 pandemic, according to estimates by the United Nations Conference on Trade and Development based on three different scenarios related to the duration over time of coronavirus control measures. In the best case scenario, a shutdown of the sector of only four months, tourism will lose $1.2 trillion, or 1.5% of the world's gross domestic product (GDP). Tourism is the backbone of many countries' economies, with a value that has more than tripled in 20 years.
If the disruption in international tourism were to last eight months, losses would reach $2.2 trillion, equivalent to 2.8 per cent of world GDP, an estimate that is in line with that projected by the World Tourism Organization. The most pessimistic scenario is based on a 12-month break in international tourism, which would cost about $3.3 trillion or 4.2 per cent of world GDP.
Tourism is the backbone of many countries' economies, having more than tripled in value from $490 billion to $1.6 trillion over the past 20 years, according to the World Tourism Organization. But COVID-19 has stopped it, causing serious economic consequences worldwide," the conference said.
Prevailing blockade measures in some countries, travel restrictions, reductions in consumer disposable income and low levels of confidence could significantly slow the recovery of the sector. Although tourism is slowly restarting in a growing number of countries, it remains stagnant in many nations.
"These figures are a clear reminder of something we often seem to forget: the economic importance of the sector and its role as a lifeline for millions of people around the world," said the conference's director of international trade, Pamela Coke-Hamilton. "For many countries, such as small island developing states, a collapse in tourism means a collapse in their development prospects. This is not something we can afford," she added.
Developing countries could suffer the greatest losses in GDP. Jamaica and Thailand stand out, losing 11% and 9% of GDP, respectively, in the most optimistic scenario and up to 32% and 18%, respectively, in the most pessimistic scenario. Other tourism hotspots such as Kenya, Egypt and Malaysia could lose between 3% and 10% of their GDP.
Among the countries of the region, the Dominican Republic will probably be the most affected with a drop of 5% of its GDP, or US$ 4369 million, in the most benign scenario and 16% of GDP, or US$ 12,939 million in the most extreme. Colombia may also see its GDP fall between 2% and 4% depending on the different models, while Ecuador, Mexico and Argentina may fall between 1% and 4%.
But the tourism sector in many rich nations will also feel the pressure. According to UNCTAD forecasts, popular destinations in Europe and North America, including France, Greece, Italy, Portugal, Spain and the United States, could lose billions of dollars due to the dramatic decline in international tourism.
Croatia is the most extreme case in Europe, as it may see its GDP decline by 8% at best, and 16% at worst. Portugal will see a drop of between 6% and 15% and Greece between 4% and 13%. On the continent, Spain is next, whose GDP may fall by 3%, or $44.119 billion, in an optimistic scenario and up to 9%, or 129,122 in a pessimistic one.
Travel and tourism represent a significant part of the world's GDP and more than half of the national income of many countries. Coronavirus-induced losses in tourism have a secondary effect on other economic sectors that supply the goods and services travelers seek while on vacation, such as food, drink and entertainment.
The United Nations Conference on Trade and Development estimates that for every million dollars lost in international tourism revenue, a country's national income can fall by two to three million dollars. The massive drop in tourist arrivals has also left an increasing number of skilled and unskilled workers unemployed or with lower incomes. Estimates show that, in the most affected countries, such as Thailand, Jamaica and Croatia, employment for unskilled workers could decline by double-digit rates, even in the most moderate scenario. In the case of wages for skilled workers, the sharpest falls were observed in Thailand, at about 12 per cent, Jamaica, at 11 per cent, and Croatia, at 9 per cent, in the optimistic case, doubling or tripling in the worst case.
The effects could be particularly negative for women, who are expected to be disproportionately affected by the layoffs in tourism due to COVID-19, according to the report. Women are more likely than men to be entrepreneurs in tourism and account for about 54% of workers in the lodging and food service sectors. And because many women in the sector work informally in low-skilled jobs, they are less likely to have unemployment benefits or other safety nets.
"That's why women are particularly affected in this crisis. And that's why policies that help protect the sector also protect the economic empowerment that many of these women have long fought for," Coke-Hamilton said.
The UN calls for greater social protection in affected nations to avoid the worst economic hardship for individuals and communities that depend on tourism. It urges governments to protect workers. When some businesses are unlikely to recover, wage subsidies should be designed to help workers move into new industries. Governments should also help tourism businesses that are at risk of bankruptcy, such as hotels and airlines. One approach to financial assistance is low-interest loans or grants, according to the report. In addition, the Conference on Trade and Development calls on the international community to support access to financing for the most affected countries.
