Tourism revenues could drop drastically, according to the United Nations. In Africa, Morocco and Kenya would be the countries most affected both by the scarcity of tourists and by the indirect loss of outlets.
The global tourism sector could lose at least $1.2 trillion, or 1.5% of global GDP, after being immobilized for almost four months due to the coronavirus pandemic. These are the conclusions of the UNCTAD (United Nations Conference on Trade and Development) in a report published in early July.
The loss could reach $2.2 trillion, 2.8% of world GDP, if the suspension of international tourism lasted eight months. Scenario considered by the United Nations World Tourism Organization. In an even more pessimistic scenario, the UNCTAD estimates the losses, with a one-year hiatus in international tourism, at $3.3 trillion or 4.2% of world GDP.
If African countries are not the most dramatically affected, six of them will nevertheless be heavily affected. Mainly Kenya and Morocco, which could post a 5% drop in their GDP, according to a median scenario. Mauritius, Senegal, Egypt and South Africa could experience a 3% drop in GDP.
Global tourism, whose revenues have more than tripled in the past 20 years, from $490 billion to $1.6 trillion, is the backbone of many countries’ economies and a lifeline for millions of people in the world. However, the Covid-19 has shut down the sector, causing serious economic consequences worldwide.
Lock-in measures in some countries, travel restrictions, reduced consumer disposable income and low confidence could slow the recovery of the sector considerably. Although tourism is slowly recovering in an increasing number of countries, it remains stalled in many others.
Indirect effects on other sectors of activity
“These figures are a reminder of what we often seem to forget: the economic importance of the sector and its role as a lifeline for millions of people around the world”, said UNCTAD director of international trade Pamela Coke-Hamilton.
“For many countries, such as small island developing states, a collapse in tourism means a collapse in their development prospects. We can’t afford it.”
Developing countries could experience the greatest GDP losses. If the countries most affected are Jamaica and Thailand, African countries, therefore, are not spared. Western countries (France, Greece, Italy, Portugal, Spain, United States) could also lose billions of dollars due to the dramatic fall in international tourism.
Indirectly, these tourist losses induced by the coronavirus “have a knock-on effect on other economic sectors which supply the goods and services that travelers seek during their holidays”, continues the UNCTAD. Which cites the example of food and entertainment (swimming pools, theme parks, shows, etc.).
Analysts estimate that for every million dollars in international tourism revenue lost, a country’s national income could fall by $2 to $3 million.
Morocco, for example, could see its leisure and restaurant revenues fall by 55%, depending on the moderate scenario. The other sectors would be significantly less affected. The crisis indirectly resulting in a 5% drop in skilled employment.
In concluding its report, UNCTAD calls for strengthening social protection in the affected countries in order to avoid the worst economic hardship for people and communities who depend on tourism. It urges governments to protect workers. When it seems that businesses will not survive the crisis, “wage subsidies should be designed to help workers move to new industries”.
Governments should also assist tourism businesses facing bankruptcy risk, such as hotels and airlines. Financial relief could take the form of easing borrowing conditions, or low-interest subsidies. Finally, the UNCTAD calls on the international community to support access to finance for the countries hardest hit.
Reference: https://www.aa.com.tr/en/economy/tourism-could-lose-12t-due-to-pandemic-un/1896357
Photo by VisionPic .net from Pexels
