Global tourism’s crash could amount to $4 trillion in losses: UNCTAD

Global tourism’s crash could amount to $4 trillion in losses: UNCTAD

GENEVA — A new report has put the estimated loss to the global GDP in 2020 and 2021 at a staggering $4 trillion, a direct result of the pandemic’s impact on international tourism.

The report by UNCTAD, jointly presented with the UNWTO and published on June 30, says international tourism and its closely linked sectors suffered an estimated loss of $2.4 trillion in 2020 alone due to direct and indirect impacts of a steep drop in international tourist arrivals.

A similar loss may occur this year, the report warns, noting that the tourism sector’s recovery will largely depend on the uptake of COVID-19 vaccines globally.

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.”

 

VACCINE INEQUITY

The report also found that with COVID-19 vaccinations being more pronounced in some countries than others, tourism losses are reduced in most developed countries but worsened in developing ones.

Vaccination rates are uneven across countries, ranging from below 1% of the population in some countries to above 60% in others. As a result, developing countries could account for up to 60% of the global GDP losses. 

The tourism sector is expected to recover faster in countries with high vaccination rates, like France, Germany, Switzerland, the United Kingdom and the United States. But experts don’t expect a return to pre-COVID-19 international tourist arrival levels until 2023 or later, according to UNWTO, citing barriers like travel restrictions, slow containment of the virus, low traveller confidence and a poor economic environment.

UP TO $1.8 TRILLION LOSS IN 2021

A rebound in international tourism is expected in the second half of 2021, but the report still shows a loss of between $1.7 trillion and $2.4 trillion this year, compared with 2019 levels.

The report assesses the economic effects of three possible scenarios, all reflecting reductions in international arrivals, in the tourism sector in 2021. 

The first scenario, projected by UNWTO, reflects a reduction of 75% in international tourism arrivals – the most pessimistic forecast – based on tourist reductions observed in 2020. In this scenario, a drop in global tourist receipts of $948 billion causes a loss in read GDP of $2.4 trillion, a 2.5-fold increase. This ratio varies greatly across countries, from onefold to threefold or fourfold. 

The second scenario reflects a 63% reduction in international tourist arrivals, a less pessimistic forecast by UNWTO.

And the third scenario, formulated by UNCTAD, considers varying rates of domestic and regional tourism in 2021. It assumes a 75% reduction of tourism in countries with low vaccination rates, and a 37% reduction in countries with relatively high vaccination rates, mostly developed countries and some smaller economies.

JOB LOSSES

According to the report, the reduction in tourism causes a 5.5% rise in unemployment of unskilled labour on average, with a high variance of 0% to 15%, depending on the importance of tourism for the economy. Labour accounts for around 30% of tourist services’ expenditure in both developed and developing economies. 

LOSSES WORSE THAN PREVIOUSLY EXPECTED

In July 2020, UNCTAD estimated that a 4- to 12-month standstill in international tourism would cost the global economy between $1.2 trillion and $3.3 trillion, including indirect costs.

These losses are worse than previously expected, as even the worst-case scenario UNCTAD projected last year has turned out to be optimistic, with international travel still low more than 15 months after the pandemic started.

According to UNWTO, international tourist arrivals declined by about 1 billion, or 73%, between January and December 2020. In the first quarter of 2021, the UNWTO World Tourism Barometer points to a decline of 88%.

Developing countries have borne the biggest brunt of the pandemic’s impact on tourism, suffering the largest reductions in tourist arrivals in 2020. These are estimated at between 60% and 80%, with the most affected regions being North-East Asia, South-East Asia, Oceania, North Africa and South Asia. The least-affected regions are North America, Western Europe and the Caribbean.