Covid 19 pandemic induced downfall in global tourism is likely to bring in a loss of more than four trillion to the global GDP for the years 2020 and 2021, according to an UNCTAD report.
The report, jointly presented with the World Tourism Organization (UNWTO), notes that the pandemic’s direct impact on tourism and its effect on other sectors closely linked to it led to the estimated loss. The UNCTAD report says that global tourism and its closely linked sectors suffered an estimated loss of 2.4 trillion dollars in 2020 because of a direct and indirect impact of a steep drop in international tourist arrivals. They also warn of a similar loss in 2021. Apart from this, the report stresses that the recovery of the sector depends on the uptake of COVID19 vaccines globally.
UNCTAD acting Secretary-General Isabelle Durant opined that the world needs a global vaccination effort to protect the workers, mitigate adverse social effects and make strategic decisions regarding tourism. Meanwhile, 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.”
DEVELOPING COUNTRIES AND VACCINE INEQUALITY
The Report says that tourism losses worsened in developing countries, whereas it was much reduced in most develop Countries. It also mentions that vaccination rates are uneven across countries, ranging from below one per cent of the population in some countries to above 60 per cent in others. The UNCTAD and UNWTO says that countries with high vaccination rates such as United States, Germany, France, Switzerland and the United Kingdom tourism will see a faster recovery. However, travel experts do not see a return to pre-COVID-19 international tourist arrival levels until 2023 or later.
2.4 TRILLION DOLLAR LOSS
The UNCTAD report states that global tourism will see a rebound in international tourism in the second half of 2021. However, the loss in the sector will remain between 1.7 trillion dollars and 2.4 trillion dollars in 2021 in comparison to 2019 levels. The authors say that the results are based on simulations that capture the effects of international tourism reduction only.
The UNCTAD assessed the economic effects of three possible scenarios, all of which reflected reductions in international arrivals.
The first one reflects a reduction of 75 per cent in international tourist arrivals. In this scenario, the report shows a drop in global tourist receipts of 948 billion dollars causes a loss in real GDP of 2.4 trillion dollars. The report said that the ratio varied across countries, from one f old to threefold or fourfold. This ratio is a multiplier and depends on the backward linkages in the tourism sector, including the unemployment of unskilled labour, said the report.
As an example, the report talks about the tourism sector in Turkey. International tourism contributes about five per cent of the GDP in Turkey and the country suffered a 69 per cent fall in international tourists in 2020. The country’s fall in tourism demand is estimated at 33 billion dollars and this leads to losses in closely linked sectors like food, beverages, communications, transport and retail trade.
In the second scenario, the report tells about a 63 per cent reduction in international tourist arrivals. The third scenario, formulated by UNCTAD, considered varying rates of domestic and regional tourism in 2021. It points out a 75 per cent reduction of tourism in countries with low vaccination rates and a 37 per cent reduction in countries with relatively high vaccination rates, mostly developed countries and some smaller economies.
The report points out that reduction in tourism causes a 5.5 per cent rise in unemployment of unskilled labour, with a high variance of zero per cent to 15 per cent, depending on the importance of tourism for the economy. It said that Labour accounted for around 30 per cent of tourist services expenditure in both developed and developing economies.
The UNCTAD in 2020 estimated that a four- to 12-month standstill in international tourism would cost the global economy between 1.2 trillion dollars and 3.3 trillion dollars, including indirect costs. However, the report mentions that the losses are worse than expected
The UNWTO estimates said that tourist arrivals declined by about one billion or 74 per cent between January and December 2020. In the first quarter of 2021, the UNWTO World Tourism Barometer points to a decline of 84 per cent. The developing countries were the worst hit with largest reductions in tourist arrivals in 2020. North-East Asia, South-East Asia, Oceania, North Africa and South Asia are the worst affected regions, the report said.