The coronavirus (COVID-19) pandemic could cause the global economy to lose over US$4 trillion in gross domestic product (GDP) due to the collapse of international tourism, according to a report from the United Nations.
Published on Wednesday, the report from the UN’s Conference on Trade and Development (UNCTAD) said the estimated loss was caused by the pandemic’s direct impact on tourism as well as ripple effects on sectors closely linked to it.
Around US$2.4 trillion was lost from international tourism and related sectors in 2020 alone as a result of the “steep drop in international tourist arrivals”, UNCTAD said, adding that a similar loss may occur this year and the tourism sector’s recovery will “largely depend on the uptake of COVID-19 vaccines globally”.
While a rebound in international tourism is expected in the second half of 2021, UNCTAD estimated a loss to world GDP of between US$1.7-US$2.4 trillion for the year compared to 2019 levels.
Countries predicted to be most impacted by the decline in tourism include Turkey, which relies on tourism for 5% of its GDP and suffered a 69% decline in tourists in 2020, costing the country around US$33bn.
Other nations forecast to suffer sharp shocks from the decline in tourism included Ecuador, South Africa and Ireland, while the UK was expected to suffer a 3.2% hit to GDP under the report’s worst-case scenario.
UNCTAD said losses suffered during the last 12 months had been “worse than previously expected”, with the conference estimating in July 2020 that a four-to-12 month standstill of international tourism would cost the global economy between US$1.2-US$3.3 trillion.
It added that international tourist levels are not expected to return to pre-COVID levels until 2023 or later.
The report, particularly the prediction that recovery may take another 2 years, is likely to make for grim reading among London-listed travel firms and carriers such as TUI AG (LON:TUI), Ryanair Holdings PLC (LON:RYA), easyJet PLC (LON:EZJ), Wizz Air Holdings PLC (LON:WIZZ) and On The Beach PLC (LON:OTB), all of which saw demand crater during the peak of the pandemic with only a muted rebound as travel restrictions are slowly eased.
Shares in TUI were up 0.4% at 366.3p in late morning trading on Wednesday, while Ryanair rose 1.4% to EUR15.79, easyJet climbed 1% to 901.4p, Wizz Air ascended 1.2% to 4,654p and On The Beach inched up 0.3% to 326p.