International tourism is in deep crisis

Tourism has been one of the major economic sectors that has been affected horribly by the fury of the coronavirus pandemic as months of lockdowns, border closures, travelling restrictions, quarantine measures and fears of Covid-19 resurgence continue to push the leisure industry to the edge of an abyss.

While airliners remain caged in hangars with their wings clipped and the once lively and packed tourist spots draw the scenes of deserted hotels, the washed-out holidaying business has bankrupted quite a few international carriers and poses serious threats to the existence of several others.

It is not just aviation giants or other businesses that feel the heat of Covid-19 from a scorching distance. The survival of many global economies and millions of people is deeply tied with tourism, whom the disease is showing no mercy to, and keeps lowering their expectations of revival.

Lending a prognosis over the compound challenges being encountered by the tourism sector, the IMF’s 2020 External Sector report warned that countries such as Costa Rica, Greece, Morocco, Portugal and Thailand could be among the hardest-hit nations with losses in tourism proceeds exceeding 3% of GDP.

The fund’s assessments were based on the UN World Trade Organization’s (UNWTO) May 7 report — which projected lost export revenues to reach up to $1.2 trillion in 2020, putting at least 100 million direct tourism jobs at risk, and predicted a sharp decline in tourism receipts of 70% if the sector is gradually opened in September.

The UN Conference on Trade and Development (UNCTAD) says this loss in export revenues of tourism, a sector making up 7% ($1.7 trillion) of global trade and supports one in 10 jobs globally, could raise the global economic losses to $3.3 trillion or 4.2% of world GDP in 2020 if the shutdown of international tourism industry prevails for a year.

International tourism is the world’s third-largest export category with about $1.6 trillion, behind chemicals and fuel that each amounted for more than $1.9 trillion in 2017, and the sector added $100 billion to its revenues in 2018, $5 billion a day in exports. Every year, more than 80 million travellers travel to the US, Spain and France, bringing $214 billion, $74 billion and $67 billion in earnings, respectively.

Alas, the signs of recovery of international tourism are not good. With all world economies “several quarters” away from returning to pre-pandemic growth levels — including the US which shrank by 33%, the most since WWII — it is very disquieting that the industry would witness a comeback any time soon.

Casting doubts on the much-lauded “V-shaped recovery,” the Fitch ratings, despite moderately upward revision of the global economic outlook, expected unemployment to significantly rise in the Eurozone, the top recipient of tourism revenues with job subsidies scaled back and labour-intensive sectors including tourism continuing to struggle.

As the UNWTO World Tourism Barometer estimated, the near-complete lockdown, led to a 98% fall in international tourists in May when compared to 2019. The world cannot be complacent about tourism and there is a pressing need to assist tourism enterprises such as airlines and hotels, tourism-reliant economies and millions of workers and their families.

Hence, it is very important for all countries to cooperate with each other and take extraordinary steps to protect this critical source of income that is risking global growth and the livelihoods of 100 million people, and to help them through the bitter end of the outbreak.

UNCTAD’s five-point policy pathway for a sustainable revival of globe-trotting activities, including mitigating socio-economic impacts on livelihoods; boosting competitiveness and building reliance; advancing innovation and digital transformation of tourism; fostering sustainability and green growth; and coordination and partnerships to restart and transform sector towards achieving SDGs, should be rigorously implemented or else the insurmountable obstacles would strike a grievous harm to international tourism.

Published in The Express Tribune, October 1^st, 2020.

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