The effects of the Coronavirus continue to generate losses in the millions for this strategic sector. However, aid is still insufficient.
The Coronavirus continues to make its way in the world. Cases of Coronavirus across the pond in the new continent continue to grow, while in Europe, the high rate of infection with the virus continues to spread across the old continent. All this, while China seems to find a stability, threatened with another possible outbreak that could again exert a strong shock to Asian countries.
In summary, this would be the global situation that shows the behavior of the Coronavirus in different parts of the world. A summary from the health point of view, which shows that concern that our health workers, all over the world, have, given the viral expansion that can be perceived at the moment. However, despite the analyses, countries continue to show a very slight concern about the economic effects of the Coronavirus, which, as we have seen, have a degree of seriousness that does not leave us indifferent to the situation.
Despite the damage caused by the Coronavirus to the economy, many sectors, such as tourism, a strategic sector for a large number of countries, still do not receive the aid that would make it possible, at the very least, to alleviate the effects of the virus and avoid the consolidation of these losses caused by the economic inactivity that the world is experiencing at the moment. If we look at the situation from the point of view of the tourism sector, we are talking about the fact that the vast majority of services are currently either at a minimum or closed to the public.
This, of course, translates into a staggering reduction in income for the tourism sector. The confinement of society to their homes, as well as the closure to air traffic that more and more countries are undertaking in the face of such a drastic situation, has led to an unprecedented historical standstill in a sector as important to the economy and development as tourism. A sector that represents nearly 10.4% of the world’s gross domestic product (GDP), while at the same time it has been responsible for generating 20% of all the jobs created on the planet since 2013.
As we can see, one of the main economic engines of the planet is fading away as the days go by. The losses have already been quantified in a considerable number of millions which, despite the statistics, which show losses of 70 billion for the tourism sector, as well as losses of 113 billion dollars for the air sector, if the quarantine time is extended, as well as the intensity of the viral outbreak, we could be talking about losses that are abruptly higher than those shown by the statistics at this time.
And this is a very likely scenario. The logarithmic scale that reflects the infection curve in the countries most affected by the Coronavirus at this time reflects an uncertain scenario, which does not give the leaders the capacity to estimate when the flattening of the curve that everyone expects will occur. A flattening that would reflect, precisely, that control and stability of the outbreak, which could lead to a moderate reactivation of the economy, as well as of the sectors most affected by the situation and the present scenario.
However, this is the real problem. We are counting on the fact that, once the pandemic is over, the scenario will return to its previous situation with complete normality, so there is no emphasis on giving aid to sectors such as tourism. However, if the scenario passes and the situation does not return to normal, many analysts are already considering, even, the bankruptcy of a large number of airlines, due to the paralysis of their economic activity and the lack of income to sustain complex and very large business structures.
Again, and let’s be redundant, we say what the tourism sector is. It seems that those in power, despite the situation, are not aware of the scenario. They are not aware that we are talking about a total – not partial – paralysis of one of the sectors with the greatest added value for the economies. And in spite of this, the different States continue to see it happen, waiting for the health systems to announce a positive evolution that even the health systems themselves, at this time, cannot claim. Meanwhile, the sector, as well as the economy, continues to count the billions that are lost with the passing of the days.
As we have said on numerous occasions, statistics show that the average daily income of the sector in the world is a whopping 5 billion dollars a day. This amount comes from the almost 200,000 daily flights that take off every day, hotel occupancy across the planet, tourist spending, as well as all those activities that, as we said, contribute a great monetary value to our coffers, as well as to the pockets of all those citizens of the planet who, directly or indirectly, live and feed off the activity generated by this sector.
We continue to fight to ensure that this aid reaches them. We cannot slow down and hope that this whole situation will completely dissipate in two months’ time. It is a very risky scenario, since the resumption of a sector like tourism, despite having controlled the curve, could happen more gradually than the rest of the sectors. Consumer confidence could be undermined at the moment, which would mean that, despite the recovery, the halt in tourism would be postponed for a few more months. In a scenario of such risk and uncertainty, the first thing people do is to stop all superfluous spending, including tourism spending.
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Francisco Coll MoralesEconomist
