The situation is becoming increasingly unsustainable for the sector. It is a strategic sector for the world economy and one that we should help.
The situation of the Coronavirus in the world is already a complete media chaos. If you stop to watch the media, you will see how all of them keep the Coronavirus on their front pages every minute. The Coronavirus has become our daily bread, generating a social panic that has led Donald Trump himself to rectify his funny message about greetings between people, blocking their borders and restricting the arrival of flights of European origin.
In Europe, the recession for Germany and Italy is already more than discounted. The effects of the Coronavirus on the economy show a lethality that other epidemics have not shown. A lethality that, added to the slowdown that the economy had already been experiencing for months, has led to a total paralysis of economic activity. This is because, although it may seem truly crazy, it is already happening. Italy has already announced the closure of shops and establishments, with the exception of supermarkets and pharmacies.
A country that is paralyzed and that, as we said, has just reaped contractions in its gross domestic product (GDP) during the last quarter of last year. In economic terms, the technical recession in view of the situation that is causing the Coronavirus is already a fact. Also in Germany, where production was very weak, in the absence of a viral outbreak like this one, which has caused a shock in the German economy, so dependent on exports and industry.
But as an institution and organization dedicated to the tourism sector, we cannot continue to talk about industry and commerce without mentioning one of the sectors that is currently most affected by the Coronavirus. And that, dear friends, is the tourism sector. A tourist sector that is going through the current situation with the same panic as civil society. And the fact is that, in the face of a situation in which migratory traffic is paralyzed, tourism is the sector that first suffers, since it affects the sector itself as a direct blockade.
According to the figures provided by our friends at the UNWTO, the World Tourism Organization, the sector is at a difficult crossroads. A hard crossroads that could lead the sector to incur losses of $70 billion. Considering that the income derived by the tourism sector in the world is 1.7 trillion dollars, the losses caused by the Coronavirus for the tourism sector represent 4% of the total income of the sector.
Precisely the same growth that tourism experienced between 2017-2018. In other words, all the growth accumulated during 2018 in the tourism sector, due to the shock generated by the viral spread, has been lost. And all in a matter of weeks, which is the worst thing. Thus, we can already estimate that the tourism sector, at least in 2019, will have a growth that, if it reaches 1%, should be more than satisfied. Given what has happened, it would be absurd to think that the sector can recover in such a way that it will recover growth in the coming months.
Even so, not everything has been said in this matter. The losses that our partners foresee have been quantified in the current scenario. However, no one is anticipating that the Coronavirus situation could spread, prolonged, over a longer period of time. If this happens, these losses will exceed the growth threshold, causing contractions in the tourism sector that, in other words, would force the sector to register a year in negative, with consequent losses for the companies that make up the sector.
Losses that, in some cases, are already being consolidated. In other words, the bankruptcy of such prominent companies as Flybe, Europe’s largest regional airline, as well as the possible bankruptcy of Norwegian, has meant that, in the case of Flybe, for example, this translates into the dismissal of more than 2 000 staff who were employed by the airline. And, to take into account, tourism is precisely one of the sectors that generates most employment in the planet, so the losses could be consolidated more effectively.
Tourism, since 2013, has generated 20% of the new employment generated in the world. In other words, 2 out of every 10 jobs that have been generated in the world since 2013 have been in the tourism sector. In turn, the seasonality, for example in the case of Spain, of the sector is very high. We are talking about the fact that the second largest tourist industry in the world is 32% temporary. Therefore, if tourism suffers and we have to take decisions similar to Italy’s, 32% of the employment we generate could be completely eliminated.
A rather worrying situation for tourism. From the World Tourism Forum, as well as the World Tourism Forum Institute, we are worried about the situation that is coming. We are talking about a sector with a great contribution to the world economy.
Specifically, 10.4% of world GDP, as well as a contribution that, as we said, represents 20% of all newly created employment for more than 7 years. For this reason, it is necessary to adopt fiscal measures that seek to alleviate, and soften, the effects for such a crucial and strategic sector as tourism.
”
Francisco Coll MoralesEconomist
