UNCTAD estimates losses in the most pessimistic scenario, a 12-month break in international tourism, at $3.3 trillion or 4.2% of the global GDP
The world's tourism sector could lose at least $1.2 trillion or 1.5% of the global gross domestic product (GDP), having been placed at a standstill for nearly four months due to the Covid-19, said the latest report of United Nations Conference on Trade and Development (UNCTAD)
The report, published on July 1, warned that 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, in line with the expected decline in tourism as projected by the UN World Tourism Organization (UNWTO).
UNCTAD estimates losses in the most pessimistic scenario, a 12-month break in international tourism, at $3.3 trillion or 4.2% of the global GDP.
According to UNWTO, 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.
But Covid-19 has brought it to a halt, causing severe economic consequences globally.
"These numbers are a clear reminder of something we often seem to forget: the economic importance of the sector and its role as a lifeline for millions of people all around the world," said Pamela Coke-Hamilton UNCTAD's director of international trade.
"For many countries, like the small island developing states, a collapse in tourism means a collapse in their development prospects. This is not something we can afford," she added.
Developing countries could suffer the steepest GDP losses.
According to UNCTAD estimates, Jamaica and Thailand could lose 11% and 9% of GDP respectively.
Other tourism hotspots such as Kenya, Egypt and Malaysia could lose over 3% of their GDP.
But the tourism sector in many rich nations will also feel the squeeze. Popular European and North American destinations, including France, Greece, Italy, Portugal, Spain and the United States could lose billions of dollars due to the dramatic drop in international tourism, according to UNCTAD forecasts.
Impact on other sectors, jobs and wages
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.
UNCTAD therefore estimates that for every $1 million lost in international tourism revenue, a country's national income could decline by $2 million to $3 million.
The massive fall in tourist arrivals has also left a growing number of skilled and unskilled workers unemployed or with less income.
The effects could be particularly negative for women, who are expected to be disproportionately affected by layoffs in tourism due to Covid-19, the report said.
UNCTAD calls for strengthened social protection in the affected nations to prevent the worst economic hardship for people and communities that depend on tourism.