Global economy could lose over $4T due to COVID-19 impact on tourism : Monday, 5th July 2021 : 4Hoteliers

Due to the lack of widespread COVID-19 vaccines, economic losses are increasing in developing countries. According to a UNCTAD report, the crash in international tourism caused by the coronavirus epidemic could result in a loss of $4 trillion to the world's GDP for 2020 and 2021. The pandemic's direct effect on tourism and its ripple effects on other closely related sectors has led to the estimated loss. This report was jointly produced with UN World Tourism Organization (UNWTO). It estimates that international tourism and closely related sectors suffered a loss of $2.4 trillion in 2020 as a result of the direct and indirect effects of a sharp drop in international tourists arrivals. The report warns that similar losses could occur in the coming year. It also notes that tourism sector recovery will heavily depend on global uptake of COVID-19 vaccinations. According to UNCTAD Acting Secretary General Isabelle Durant, the world needs a global vaccine effort that will protect workers and mitigate negative social effects. It will also make strategic decisions about tourism, taking into consideration potential structural changes, said Isabelle Durant. Zurab Pololikashvili, Secretary General of UNWTO, stated that tourism is vital for millions of people. Providing vaccinations to help communities recover and to support tourism's safe start is crucial to the recovery and development of jobs, as well as to generate much-needed resources. This is especially true in developing countries which are heavily dependent on international tourism. Inequity in vaccines is a problem for developing countries The report states that COVID-19 vaccinations are more prevalent in certain countries than in others. This means that tourism losses in developed countries have decreased, but become worse in developing countries. "Tourism is the lifeline of millions. Advancing vaccination to protect communities, support tourisms safe start, is crucial to the recovery and generation of needed resources and jobs, especially in developing nations, which are heavily dependent on international tourist' The COVID-19 vaccination rates vary from below 1% in some countries to over 60% in others. The report states that the asymmetric rollout of vaccines can increase the economic damage tourism has suffered in developing nations, which could lead to up to 60% of global GDP losses. According to the report, the tourism sector will recover quicker in countries with high vaccination rates like France, Germany and Switzerland. UNWTO reports that experts don't expect an increase in international tourist arrivals to levels pre-COVID-19 until 2023, or later. Travel restrictions, slow cure, low confidence in travelers, and poor economic conditions are the main obstacles. In 2021, a loss of up to $1.8 trillion is expected Although international tourism will rebound in the second half this year, the UNCTAD report still shows that there is a loss between $1.7 trillion to $2.4 trillion in 2021 compared to 2019. These simulations only capture the impact of international tourism reduction, and not on policies like economic stimulus programmes that might soften the sector's pandemics effect. The report examines three scenarios that could have economic consequences for the sector, all of which would result in a decrease in international tourists arriving in 2021. UNWTO projects the first one. It reflects a 75% reduction in international tourist arrivals. This is the most pessimistic forecast, based on 2020's tourist reductions. This scenario shows that a drop of $948 billion in global tourist receipts causes a decrease in real GDP of $2.4 trillion. That's a two-and a half-fold increase. This ratio can vary greatly between countries, ranging from onefold to threefold to fourfold. According to the report, this multiplier is dependent on backward links in the tourism sector. This includes the unemployment of unskilled labor. Turkey's GDP is about 5%, and international tourism contributed 69% to the decline in 2020. According to estimates, the country's decline in tourism demand amounts to $33 billion. This leads directly into losses in closely related sectors like food, beverage, communications, transport, and retail trade. Turkey's output has fallen by $93 billion since the shock. This is three times more than the initial shock. A decline in tourism alone has contributed to a real GDP decrease of around 9%. The decline in real life was partially offset by fiscal measures that stimulated the economy. The second scenario shows a 63% decrease in international tourists arrivals. This is a more optimistic forecast from UNWTO. The UNCTAD has also created a third scenario that considers the varying rates of regional and domestic tourism in 2021. It assumes a 75% decrease in tourism in countries that have low vaccination rates and a 37% drop in countries with high vaccination rates. This is mainly for developed countries and smaller economies. All countries suffer job losses According to the report, a decrease in tourism results in a 5.5% increase in unemployment for unskilled labor on average. There is a large variance of 0 to 15% depending on how important tourism is to the economy. Around 30% of all tourist services spending in developed and developing countries is accounted for by labour. The sector is highly populated by young women and has low entry barriers. Losses that are worse than expected UNCTAD calculated that the global economy would suffer from a stoppage in international tourism for between four and twelve months, resulting in a loss of $1.2 trillion to $3.3 trillion. This includes indirect costs. However, the losses are much worse than expected. Even the worst-case scenario UNCTAD predicted last year is optimistic. International travel has remained low for more than 15 months since the pandemic began. UNWTO reports that international tourist arrivals decreased by approximately 1 billion, or 73%, between January 2020 and December 2020. The UNWTO World Tourism Barometer shows a drop of 88% in international tourist arrivals during the first quarter 2021. The greatest impact of pandemics on tourism has been felt in developing countries. These countries saw the greatest drop in tourist arrivals between 60% and 80% in 2020. North-East Asia and South-East Asia are the most affected regions. Oceania and North Africa are the least affected. North America, Western Europe, and the Caribbean are the least affected.


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