The global tourism industry could lose as much as US$3.3-trillion as a result of the pandemic and the worldwide travel shutdown.
This is according to the ‘Covid-19 and Tourism’ report released by The United Nations Conference on Trade and Development (UNCTAD) in Geneva on Wednesday 1 July.
Projections cover three possible scenarios
The projections in the report are based on three possible scenarios: a lockdown lasting four months; a lockdown lasting eight months; and one lasting 12 months.
In those scenarios, revenues would fall US$1.17-trillion, US$2.22-trillion or US$3.3-trillion. This equates to between 1.5-4.2% of the world’s GDP.
The report’s authors do not say which of the three they believe to be the most likely.
Collapse in tourism will devastate many economies
“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 the steepest GDP losses (see figure). Jamaica and Thailand stand out, losing 11% and 9% of GDP respectively in the most optimistic scenario of UNCTAD’s estimates.
Other tourism hotspots such as Kenya, Egypt and Malaysia could lose over 3% of their GDP.
Many rich nations will also feel the economic squeeze
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.
The US incurs the highest losses in all three scenarios, with a US$187-billion decrease in the best-case scenario lasting four months, followed by China with a US$105-billion drop.
Thailand and France also stand to lose approximately US$47-billion each.
America’s loss in the worst-case scenario is US$538-billion, or 3% of GDP.
Pandemic-induced losses hit many sectors of the economy
Travel and tourism account for a significant share of global GDP and more than half of many countries’ national income, the report states.
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 US$1-million lost in international tourism revenue, a country’s national income could decline by US$2-million to US$3-million.
The massive fall in tourist arrivals has also left a growing number of skilled and unskilled workers unemployed or with less income.