According to the latest report by UNCTAD, Croatia is among the countries the GDP of which might suffer the most from tourism losses. The tourism sector could lose at least $1.2 trillion on a global scale, or 1.5% of the global GDP, due to a standstill of nearly four months caused by the coronavirus pandemic, UNCTAD notes
In the report, published on Wednesday, the UN body on trade and development addresses the economic fallout of the global COVID-19 pandemic, estimating losses in three scenarios, depending on the duration of the freeze in international tourism of four, eight and 12 months.
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, while in the worst-case scenario, which provides for 12-month break, it could soar to $3.3 trillion or 4.2% of global GDP, UNCTAD estimates.
“Tourism is a backbone of many countries’ economies and a lifeline for millions of people around the world, having more than tripled in value from $490 billion to $1.6 trillion in the last 20 years,” the report says, citing UNWTO data. “But COVID-19 has brought it to a halt, causing severe economic consequences globally”, it adds.
Even as the tourism industry is slowly restarting in an increasing number of countries, it remains at a standstill in many nations. “For many countries, like the small island developing states, a collapse in tourism means a collapse in their development prospects”, said UNCTAD’s director of international trade, Pamela Coke-Hamilton.
Analysing the impact of tourism losses on the industry’s share in the national GDP, UNCTAD estimates that Jamaica and Thailand might lose 11% and 9% of their GDP respectively.
According to UNCTAD’s moderate estimates, Croatia could lose 8% of GDP, while Portugal could lose 6% and the Dominican Republic 5%.
The 15 most affected countries also include Kenya, Morocco, Greece, Mauritius, Senegal, Ireland, Egypt, South Africa, Malaysia and Spain.
UNCTAD warned that the tourism sector would also come under pressure in many rich countries, citing popular European and North American destinations, including France, Italy and the United States.
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.
In the case of wages for skilled workers, the steepest drops could be seen in Thailand (-12%), Jamaica (-11%) and Croatia (-9%), in the best-case scenario, while doubling or tripling in the worst scenario.
“Coronavirus-induced losses in tourism have a knock-on effect on other economic sectors that supply the goods and services travellers seek while on vacation, such as food, beverages and entertainment”, the report states.
UNCTAD called for strengthened social protection in the affected nations to prevent the worst economic hardship for people and communities that depend on tourism.
It urged governments to protect workers. “Where some enterprises are unlikely to recover, wage subsidies should be designed to help workers move to new industries”, the report proposes.
“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”, UNCTAD concludes. /ibna