$4 trillion loss to economy as tourism suffers due to pandemic

Jul 4, 2021 0 comments
The impact of the COVID-19 pandemic on tourism could result in a more than $4 trillion loss to the global economy, UN trade and development body UNCTAD said on Wednesday in a report issued jointly with the UN World Tourism Organization (UNWTO). The estimate is based on losses caused by the pandemic’s direct impact on tourism and the ripple effect on related sectors, and is worse than previously expected.

$4 trillion loss to economy as tourism suffers due to pandemic

Last July, UNCTAD estimated that the standstill in international tourism would cost the global economy between $1.2 trillion and $3.3 trillion. The steep drop in tourist arrivals worldwide in 2020 resulted in a $2.4 trillion economic hit, the report said, and a similar figure is expected this year depending on the uptake in COVID-19 vaccines.

"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," said Isabelle Durant, the UNCTAD Acting Secretary-General.

"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," the UNWTO Secretary-General Zurab Pololikashvili added.

International tourist arrivals declined by about 1 billion, or 73 percent, last year, while in the first quarter of 2021 the drop was around 88 percent, the report said. Developing countries have borne the brunt of the pandemic’s impact on tourism, with estimated reductions in arrivals of between 60 percent and 80 percent.

They have also been hurt by vaccine inequity. The agencies said the "asymmetric roll-out" of COVID-19 vaccines has magnified the economic blow to the tourism sector in these nations, as they could account for up to 60 percent of global GDP losses.

It is expected that tourism will recover faster in countries with high vaccination rates, such as France, Germany, the United Kingdom and the United States. However, international tourist arrivals will not return to pre-pandemic levels until 2023 or later, due to barriers such as travel restrictions, slow containment of the virus, low traveller confidence and a poor economic environment.

While a tourism rebound is anticipated in the second half of this year, the report expects a loss of between $1.7 trillion and $2.4 trillion in 2021, based on simulations which exclude stimulation programs and similar policies. The authors outline three possible scenarios for the tourism sector this year, with the most pessimistic reflecting a 75 percent reduction in international arrivals. This scenario sees a drop in global tourist receipts of nearly $950 billion, which would cause a loss in real GDP of $2.4 trillion, while the second reflects a 63 percent reduction in international tourist arrivals.

The third considers varying rates of domestic and regional tourism. It assumes a 75 percent reduction in tourism in countries where vaccine rates are low, and 37 percent reduction in countries with relatively high vaccination levels, mainly developed countries and some smaller economies.

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