UN Estimated The Possible Loss Of The World Economy Due To The Collapse Of Tourism At $3.3 Trillion
The loss of the global economy if the crisis in the tourism sector drags on for up to 12 months could amount to $3.3 trillion. This forecast is contained in the report of the UN Conference on Trade and Development (UNCTAD) published on Wednesday in Geneva.
It is emphasized that "the world tourism sector may lose at least $1.2 trillion, which is 1.5% of global GDP, due to the stagnation for almost four months due to the coronavirus pandemic." However, experts estimate that these losses will grow to $2.2 trillion if the crisis lasts for eight months. "According to UNCTAD, according to a pessimistic scenario, a 12-month failure in the international tourism sector will lead to losses of $3.3 trillion, which is 4.2% of world GDP," the authors of the report state.
UNCTAD recalls that tourism is "the backbone of many countries' economies and a source of livelihood for millions of people around the world." Self-isolation measures, travel restrictions, and falling incomes are slowing the recovery of this sector. The loss forecasts presented in the current report are intended to remind of the "great economic importance" of tourism, said Pamela coke-Hamilton, Director of the international trade division at UNCTAD. "For many countries, such as small island States, the collapse of tourism means the collapse of their development prospects, and this should not be allowed," she warned.
According to the report, developing countries are particularly hard hit by the downturn in the tourism sector. Thailand's losses are estimated at 11% of GDP, Jamaica-9%, Kenya, Egypt, and Malaysia-up to 3%. Unemployment is expected to rise sharply. However, the rich countries will miss billions of dollars as a result of the decrease in the flow of tourists. Experts name France, Greece, Italy, Portugal, Spain, and the United States in this regard. The crisis in the tourism industry, UNCTAD warns, will also affect other sectors of the economy that provide tourists with goods and services. According to experts, the loss of every 1 million dollars of tourism revenue will result in losses of $2-3 million for States, taking into account the troubles in other sectors of the economy.
In this regard, the authors of the report called on governments to assist companies in the tourism sector facing the risk of bankruptcy. We are talking, in particular, about hotels and airlines. As one of the solutions, it is proposed to introduce low-interest lending. The international community, according to UNCTAD, could help the most severely affected countries by facilitating their access to financial assistance.