Covid-19 is set to cost the global economy as much as $4 trillion in 2020 and 2021 due to the collapse in international tourism, according to a new UN report. The estimated losses have been caused by the pandemic's direct impact on tourism as well as its ripple effects on other sectors. That drop in international arrivals led to a $2.4 trillion loss in 2020 and a similar figure is on the cards for 2021 with the global recovery largely hinging on Covid-19 vaccine uptake.
While things are improving in many developed countries, the picture remains bleak across the developing world due to vaccine inequality. While the industry is now expected to rebound quicker in countries with high vaccination rates such as Western Europe and the United States, experts do not expect a return to pre-Covid-19 tourism levels until 2023 or later.
The report uses three possible scenarios for its 2021 loss estimates that involve different drops in tourism arrivals and varying vaccination rates. Under the most severe scenario which involved a 75 percent fall in tourism arrivals, there would be another $2.4 trillion loss for 2021, an outcome that would prove devastating for many countries, particularly Turkey where tourism accounts for five percent of GDP.
The report states that Turkey would see a $33 billion fall in tourism demand under a worst-case scenario with losses in retail sectors such as food, beverages, retail trade, communications and transport leading to a $93 billion fall in output which is three times the initial shock. That would lead to a nine percent real GDP loss, though it would be partially offset by fiscal stimulus measures in reality. Ecuador and South Africa are also among the countries likely to be worst hit in the report where they would suffer real GDP contractions of nine percent and eight percent, respectively, under the most severe scenario.