UNCTAD
The COVID-19 pandemic has been a health and economic crisis with devastating effects on developing countries, especially those dependent on tourism. As governments have attempted to protect their populations, lockdowns, quarantines, and major restrictions on national and international mobility were implemented. This, coupled with the decision of consumers to limit international travel resulted in a sharp contraction for the tourism sector with severe economic consequences, particularly on countries that rely on the sector.
The results are based on GTAP simulations that capture the effects of international tourism reduction only, not policies such as economic stimulus programmes that may soften the pandemic’s impact on the sector. The report assesses the economic effects of three possible scenarios all reflecting reductions in international arrivals in the tourism sector in 2021.
The first one, projected by UNWTO, reflects a reduction of 75% in international tourist arrivals the most pessimistic forecast based on the tourist reductions observed in 2020. In this scenario, a drop in global tourist receipts of $948 billion causes a loss in real GDP of $2.4 trillion, a two-and-a-half-fold increase. This ratio varies greatly across countries, from onefold to threefold or fourfold. This is a multiplier and depends on the backward linkages in the tourism sector, including the unemployment of unskilled labour, according to the report.
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 is estimated 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.
The indirect effects of this decline are even more devastating, as labour and capital remain unused and the lack of demand for intermediate goods and services has a negative upstream effect into many sectors. 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. It has an adverse effect on Labour since it accounts for around 30% of tourist services’ expenditure in both developed and developing economies. Also, it has been found that a sector which employs many women and young employees, are relatively low.
The international tourism sector has received a blow as the pandemic would cost them about $1.2 trillion and $3.3 trillion, including indirect costs. Additionally, in the first quarter of 2021, the UNWTO World Tourism Barometer points to a decline of 88% of tourists.
Developing countries have borne the biggest brunt of the pandemic’s impact on tourism compared to developed countries, the obvious reasons are lower vaccination rates. The Covid-19 will not go without a fight, the governments and international organisations should take initiative in rolling out vaccines and introducing financial stimulants to the tourism sector, only then can we curb the pandemic as well as uplift the sector.