Global economy could lose over $4T due to Covid-19’s impact on tourism

·3 min read

THE crash in international tourism due to the coronavirus pandemic could cause a loss of more than US$4 trillion to the global gross domestic product (GDP) for the years 2020 and 2021, according to an UNCTAD report published Wednesday, June 30, 2021.

The estimated loss has been caused by the pandemic’s direct impact on tourism and its ripple effect on other sectors closely linked to it. The report, jointly presented with the UN World Tourism Organization (UNWTO), said international tourism and its closely linked sectors suffered an estimated loss of $2.4 trillion in 2020 due to direct and indirect impacts of a steep drop in international tourist arrivals.

A similar loss may occur this year, the report warned, noting that the tourism sector’s recovery will largely depend on the uptake of Covid-19 vaccines globally.

“The world needs a global vaccination effort that will protect workers, mitigate adverse social effects and make strategic decisions regarding tourism, taking potential structural changes into account,” UNCTAD acting Secretary-General Isabelle Durant said.

UNWTO Secretary-General Zurab Pololikashvili said, “Tourism is a lifeline for millions, and advancing vaccination to protect communities and support tourism’s safe restart is critical to the recovery of jobs and generation of much-needed resources, especially in developing countries, many of which are highly dependent on international tourism.”

Vaccine inequity

With Covid-19 vaccinations being more pronounced in some countries than others, the report said tourism losses are reduced in most developed countries but worsened in developing countries.

Covid-19 vaccination rates are uneven across countries, ranging from below one percent of the population in some countries to above 60 percent in others.

According to the report, the asymmetric rollout of vaccines magnifies the economic blow tourism has suffered in developing countries, as they could account for up to 60 percent of the global GDP losses.

The tourism sector is expected to recover faster in countries with high vaccination rates, such as France, Germany, Switzerland, the United Kingdom and the United States, the report said. But experts don’t expect a return to pre-Covid-19 international tourist arrival levels until 2023 or later, according to UNWTO.

The main barriers are travel restrictions, slow containment of the virus, low traveler confidence and a poor economic environment.

A rebound in international tourism is expected in the second half of this year, but the UNCTAD report still shows a loss of between $1.7 trillion and $2.4 trillion in 2021, compared with 2019 levels.

The results are based on simulations that capture the effects of international tourism reduction only, not policies such as economic stimulus programs that may soften the pandemic’s impact on the sector.

Unemployment

According to the report, the reduction in tourism causes a 5.5 percent rise in unemployment of unskilled labor on average, with a high variance of zero percent to 15 percent, depending on the importance of tourism for the economy.

Labor accounts for around 30 percent of tourist services’ expenditure in both developed and developing economies. Entry barriers in the sector, which employs many women and young employees, are relatively low. (PR)

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