With the ongoing COVID-19 pandemic, according to the UN Trade and Development Agency (UNCTAD), the global tourism sector stands to lose at minimum USD1.2 trillion or 1.5% of the global gross domestic product (GDP).
The UN agency forecasts in a report that the global loss could skyrocket to USD2.2 trillion or 2.8% of the world’s GDP if the stoppage in international tourism prolongs eight months.
The projections are in line with the expected decline in tourism as reported by the UN World Tourism Organization (UNWTO), said the agency.
In the most pessimistic circumstance estimates for a 12-month break in international tourism would result in a lost of USD3.3 trillion or 4.2% of global GDP.
“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. Further stating that, “This is not something we can afford.”
The International Air Transport Association (IATA) recently announced that passenger demand in May dropped 91.3% as compared to the same period in May 2019.
This however was improved from the 94% annual decline that was recorded in April 2020 of which as per IATA, the improvement was driven by recovery in some domestic markets—most notably China.
Tourism supports the economy of many countries throughout the World which as a result provides a livelihood for millions of people. The tourism industry has more than tripled in overall value from USD490 billion to USD1.6 trillion in just the last 20 years says the UNWTO.
COVID-19 continues to cause profound economic repercussions all around the World.
From lockdown measures, travel restrictions, the decline in consumers’ disposable income, and low confidence levels will significantly slow down the tourism industry’s recovery. Developing countries such as the Philippines could suffer the biggest GDP losses.
For example but in the most optimistic projections of the UNCTAD’s estimates, Jamaica would lose 11% and Thailand 9% of GDP. Other major tourism destinations such as Kenya, Egypt, and Malaysia stand to lose over 3% of their GDP.
However, even for the more popular global tourism destinations such as Europe and North America, the tourism sector could lose billions of dollars due to the dramatic drop in international tourism, according to UNCTAD forecasts.
The losses of the tourism industry impacts other economic sectors that supply the goods and services that tourists seek while on vacation whether it is the food, beverages, and entertainment.
The UNCTAD estimates that for every USD1 million lost in international tourism revenue, a country’s national income could decline by USD2 million to USD3 million.