EDITORIAL: While it is not surprising that one of the sectors worst hit globally by the coronavirus pandemic is tourism, the scale of expected losses is still pretty shocking. According to the UN (United Nations), this crisis could cost global tourism and related sectors anywhere between $1.2 and $3.3 trillion in lost revenue, which could well cost some of the smaller economies that depend on it for more than 50 percent of their GDP leading them towards an outright collapse. It has only been a quarter-and-a-half since the coronavirus became a truly global crisis, and the United Nations Conference on Trade and Development (UNCTAD) has said in a report titled 'Covid-19 and Tourism: Assessing the Economic Consequences' that the $1.2 trillion hit represents the best case scenario going forward. The analysis is based on three scenarios based on how the sector's supply chain holds up. One is called moderate, where a good one-third of inbound tourism expenditure is removed, equal to a four-month standstill; the second is intermediate, which removes two-thirds expenditure and is equivalent to an eight-month halt; and the third is dramatic, something like a year-long shutdown where all expenditure is removed.
Tourism is, as is pretty apparent from the numbers, a multi-trillion dollar industry considering how it involves a number of sectors of host countries. Governments are, quite naturally, always looking for ways to expand it because it stimulates earnings in everything from the hospitality sector to public and private transport. But with the pandemic making it impossible for even a few people to move about or gather in one place at one time unless absolutely necessary, it is understandable why industries like aviation and tourism are among the worst affected and would need active financial support just to stay alive. That is why tourism-dependent countries are not just expecting less visitors now but are also bracing for a substantial rise in unemployment and steep losses in their GDP (Gross Domestic Product). The UN believes that the countries that stand to be hit the most in the worst case scenario include Jamaica, which would lose something like 11 percent of its national output, Thailand with nine percent, Croatia eight percent, Portugal six percent and the Dominican Republic, Kenya and Morocco all losing at least five percent of GDP. These are indeed startling numbers yet small island countries that depend overwhelmingly on tourism could face even more devastation. Maldives, for example, has projected a shortfall of approximately $450 million in foreign currency reserves in case of a complete shutdown, which is why the World Bank expects it to be the worst hit country from the downturn in the South Asian region since collapse of its tourism sector could result in GDP contracting by as much as 13 percent.
Tourism is about more than just people going to fancy and exotic places to spend their vacations. It is, as these projections suggest, a huge sector that integrates with a whole host of other industries. That is why decline in tourism is going to have a visible knock-on effect on many other sectors as well, chief among them being transport, food, beverages and entertainment. Just last year the tourism sector accounted for a good 300 million jobs globally, according to the UN World Tourism Organisation. But with most of the top destinations, like France, Spain, the US and China, badly battered by the pandemic and in no position to host outsiders, job losses in the sector are clearly going to be significant - according to some estimates it could be well in excess of 20 percent, which means that some tourism associated sectors could be wiped out completely if things do not improve anytime soon. But since it's also pretty clear that this particular situation is not going to get much better till there's a laboratory cure for Covid-19, which could still take anywhere between one and two years, it seems affected countries will just have to bear with all the unemployment and freeze on development projects, with its own impact on jobs, for the time being.
Pakistan never fully developed its tourism potential, of course, but improving this sector has been on PTI's (Pakistan Tehreek-e-Insaf's) to-do list for a while, which explains why the prime minister wanted it reopened not long after relaxing the lockdown. And that is also precisely why news that PTDC (Pakistan Tourism Development Corporation) has closed all its motels in northern areas, and terminated the services of its employees, is so surprising. It is of course understandable that it was running into losses due to the pandemic, but it was to meet just such situations that federal and provincial governments passed orders against layoffs during this extraordinary situation. Now we have officially signaled to local as well as foreign tourists that the northern areas are no longer open to them and apparently this action is in violation of the law too. The government should instead have prepared a relief package for this sector as well to enable it to remain open and ready to attract tourists as well as foreign exchange when times get better.
Copyright Business Recorder, 2020
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