The world’s tourism sector could lose at least $1.2 trillion or 1.5% of the global gross domestic product (GDP), having been placed at a standstill for nearly four months due to the coronavirus pandemic, UNCTAD said in a detailed study report. The UN’s trade and development body warned that the loss could rise to $2.2 trillion or 2.8% of the world’s GDP if the break in international tourism lasts for eight months, in line with the expected decline in tourism as projected by the UN World Tourism Organization (UNWTO).

UNCTAD estimates losses in the most pessimistic scenario, a 12-month break in international tourism, at $3.3 trillion or 4.2% of global GDP. Prevailing lockdown measures in some countries, travel restrictions, reductions in consumers’ disposable income and low confidence levels could significantly slow down the sector’s recovery. Even as tourism slowly restarts in an increasing number of countries, it remains at a standstill in many nations.

“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.

Travel and tourism account for a significant share of global GDP and more than half of many countries’ national income. Coronavirus-induced losses in tourism have a knock-on effect on other economic sectors that supply the goods and services travelers seek while on vacation, such as food, beverages and entertainment. UNCTAD therefore estimates that for every $1 million lost in international tourism revenue, a country’s national income could decline by $2 million to $3 million. The massive fall in tourist arrivals has also left a growing number of skilled and unskilled workers unemployed or with less income.

UNCTAD estimates show that in the worst-affected countries, such as Thailand, Jamaica and Croatia, employment for unskilled workers could decrease at double-digit rates even in the most moderate scenario. And because many women in the sector work informally in low-skilled jobs, they are less likely to have unemployment benefits or other safety nets.

“This is why women are particularly hard hit in this crisis. And this is why policies that help protect the sector also protect the economic empowerment that many of these women have long fought for,” Ms. Coke-Hamilton said.

UNCTAD calls for strengthened social protection in the affected nations to prevent the worst economic hardship for people and communities that depend on tourism.  It urges governments to protect workers. Where some enterprises are unlikely to recover, wage subsidies should be designed to help workers move to new industries. Governments should also assist tourism enterprises facing the risk of bankruptcy, such as hotels and airlines. One approach for financial relief is low-interest loans or grants, the report states. In addition, UNCTAD calls on the international community to support access to funding for the hardest-hit countries.

Source- United Nations