Economic Impact of COVID-19 Pandemic and Implications on the Global Travel Industry
As the COVID-19 pandemic continues to spread, the economic activity continues to slow down. The global economic impact of the novel coronavirus is severe. The first two months of 2020 alone slowed down the global economy by 20%. The next two months witnessed more severe conditions. The deadly pandemic brings with it the greatest economic shock of 21st century after the financial crisis of 2008 and the 9/11. The official data reveals a widespread economic slowdown and signifies that more than 20% GPD decline has been witnessed and it is expected to decline further.
Global Travel Industry is Among the Worst Hit
In the wake of the COVID-19 pandemic, many industries have been hit. While virtually no industry has been left untouched by the virus, the global tourism and travel industry has been affected more severely than others. Not only has this industry taken a double hit, but it was also amongst the first sectors to be impacted by the pandemic.
According to statistics and economic analysis, tourism and travel-related industries have been hit the worst on a global scale. Air travel is a prime example of this. According to the estimates of the International Air Transport Association, the novel COVID-19 pandemic can cost international air carriers about $63-$113 billion in proceeds at the end of this year.
Tourism accounts for about 10% of the global GDP and it is directly responsible for generating one in 10 of the jobs in the world. Therefore, it is safe to conclude that any impact on this sector will have a snowball effect on the global economy. In such challenging times, there is a great need to learn economic analysis in order to fully estimate the global impacts. Econs tuition as well as others related programs are proving to be invaluable in this regard.
Considering the evolving nature of the situation, it is still early to assess and estimate the full impact of the coronavirus outbreak on the global travel industry. However, if numbers are to be believed, the World Travel & Tourism Council pegs the tourism and travel GDP loss to the global economy at $2.1 trillion in this year alone. In terms of international travel, it is estimated that the industry will see a decline by 20-30% on annual basis onward. So, on international visitors alone, this could translate into a loss of $30-$50 billion. Not to mention the COVID-19 pandemic is putting up to 75 million jobs at risk in global tourism and travel sector according to the World Travel & Tourism Council.
Restrictions and Uncertainty Around Travel Plans Are Growing
While there is a growing uncertainty around travel plans, assessing the travel plans of consumers gives some sense of gravity of the situation. In the U.S., about half of the vacationers have canceled plans on their own volition and others did it because they were forced to. In the UK, about 32% of vacationers did not have their plans affected at the beginning but it quickly changed when the condition worsened. Now with airlines around the world being closed or restricted, it is safe to say that vacationing throughout the summer will be off the cards for basically everyone.
If Outbreak is Contained, Rebound is Expected to Be Quick
Even though the coronavirus outbreak has already caused a lot of economic damage on a global scale, its future implications are expected to be even worse. If the virus continues to spread, cruises and travel agencies will likely suffer economic losses. But once the virus is contained, experts believe that the industry will rebound quickly. It is estimated on the basis of the SARS outbreak. When that outbreak ended, it took about four months for the tourism industry to stabilize. So, the same is expected once the COVID-19 outbreak is contained. Learn more about assessing the global economic impact of outbreaks as well as recovery expectations with JC economics tuition online. This is also especially important as what we may witness is repeat of the worst economic crisis in history – The Great Depression.
Road to Recovery
The tourism and travel industries are very resilient and rebound rather quickly. It is evident from the past experiences. So, as mentioned before, it will stabilize fast. Business travel may be the first to pick up whenever the COVID-19 is contained. However, others areas of the industry like exhibitions, incentives, meetings, conferences, etc. may take longer to recover since they draw very large numbers. On the other hand, the leisure front, e.g. visiting relatives and friends, may still recover earlier but holiday demand could be slower to grow.
Experts predict recovery of the tourism and travel industries perhaps by mid-2021 or even later. According to some, the recovery pace will be relatively quicker for domestic travel i.e. around 2-3 quarters, and slower for the international and long-haul travel, which can be more than six months.
Staying Informed is Key in Such Unprecedented Times
Nobody knows exactly how the COVID-19 pandemic will pan out. Only a few months ago, the thought of many countries throughout the world extensively closing their borders was unlikely to have crossed anyone’s mind. We cannot ignore the fact that the implications for the global tourism industry – between waning customer appetite and government bans – are fairly bleak. However, there are estimates that the industry will recover rather quickly if the current pandemic is contained soon.
That being said, there are signs that consumers in some countries are still thinking about vacations, even if they cannot choose to book them at the moment. Vacationers in certain countries have been hit harder than others and will likely need more nurturing to come back on board later on. Some vacationers are rebooking or deferring vacations, but a lot of them plan to save the money instead. More could be done in promoting domestic trips if these funds are to be accessed and considering that those trips become a safe option.
All in all, if the situation improves, so will its economic impact and the tourism and travel industries will rally and show a positive trend.