Covid-19

Global tourism to lose $1.2trn

UNCTAD says

Staff Correspondent

2 July, 2020 12:00 AM printer

Global tourism to lose $1.2trn

The world’s tourism sector could lose at least $1.2 trillion or 1.5 percent of the world GDP, having been placed at a standstill for nearly four months due to the coronavirus pandemic, UNCTAD said in a report published on Wednesday.

The UN trade and development body warned that the loss could rise to $2.2 trillion or 2.8 percent 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 Organization (UNWTO).

UNCTAD estimates losses in the most pessimistic scenario, a 12-month break in international tourism, at $3.3 trillion or 4.2 percent 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 to $1.6 trillion 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.

Developing countries could suffer the steepest GDP losses while 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.

UNCTAD therefore estimates that for every $1 million lost in international tourism revenue, a country’s national income could decline by $2 million to $3 million.

The massive fall in tourist arrivals has also left a growing number of skilled and unskilled workers unemployed or with less income.

The effects could be particularly negative for women, who are expected to be disproportionately affected by layoffs in tourism due to COVID-19, according to the report.

Women are more likely than men to be entrepreneurs in tourism and make up about 54 percent of the workers in the accommodation and food services sectors.

UNCTAD calls for strengthened social protection in the affected nations to prevent the worst economic hardship for people and communities that depend on tourism.

It urges governments to protect workers. Where some enterprises are unlikely to recover, wage subsidies should be designed to help workers move to new industries.

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.

In addition, UNCTAD calls on the international community to support access to funding for the hardest-hit countries.

 


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