Since the Coronavirus crisis began, there has been much speculation about how it would affect the economy. And I am not referring to the quantitative effects already estimated by the main multilateral organizations, as well as the main research agencies. No, I am referring to the qualitative effects that this viral outbreak will leave in our economy. Qualitative effects that leave aside for a moment the how much and focus on the how. How this economy will continue to function in a format that, for some, has proved to be a failure.
And this is what I mean. Countries such as Spain or Italy, where their gross domestic product (GDP) centres much of its bulk on such prominent sectors as tourism or trade, are considering new hypotheses on what the productive model of these economies should look like when the crisis subsides. A hypothesis that has not ceased to haunt the minds of the various stakeholders, who are looking for a solution in discarding those sectors that, during this crisis, have been most affected.
“We must shape our productive fabric”, “we cannot continue with such a dependent productive model”, “it is time to reduce the weight of sectors such as tourism in the economy”. These are statements that, since the economy was immersed in this crisis, both economic and health, have been repeated in the public debate and, especially, in the economic debate. Statements that might make sense in a debate if we were at least referring to the horse breeding sector; but it makes no sense at all when we refer to the tourism sector.
It is undeniable that economies such as Spain’s are fully dependent on sectors such as tourism. Its weight in the economy, which provides this sector with about 15% of GDP, has made it a strategic sector for the Spanish economy. We are not only talking about 15% of the GDP, but also about direct and indirect employment, which employs 14.7% of the working population in this country. Faced with such indicators, as I said, it is undeniable that this dependency should be recognised.
However, in the face of such dependence, many opinion leaders, as well as experts, insist on the need to diversify our productive model in order to be less dependent on certain sectors. This is not a bad strategy, but it is still the wrong one. That is, diversifying our productive model is not a bad decision; on the contrary, it could even be advantageous for the different economies. However, if diversifying our productive model entails a deterioration of the tourism sector, forced to leave our economy, as an unwanted guest, it is a mistake that, at least, countries like Spain should not make.
Over the years, the tourism sector has gained great relevance in the Spanish economy. We are talking about the fact that in recent years, the tourism sector has gone from representing 10% of the GDP to 15% of the same. But we are not only talking about a large year-on-year increase that gives the sector greater relevance, as well as a greater weight in our economy. We are also talking about the fact that the sector expects to increase its importance in our economy in the coming years. In other words, it expects to increase its weight in the GDP, and not on a small scale.
Evolution of the gross domestic product of the tourism sector in the world from 2013 to 2029 (in billions of dollars)
As the graph shows, the tourism sector, in a projection that calculates the contribution in billions of euros for the Spanish economy, taking into account the year 2028 as a horizon, the weight of tourism in that economy intends to continue to expand. This is the projection made by the portal Statista, which is only one of the many statistics that reflect this reality. A reality that we have been experiencing in the years that preceded us, but that we intend to continue experiencing in the years to come.
And it is for this reason that discarding this sector of our productive model is nonsense. Many proposals are made as to how it should be discarded, but we never make proposals as to how to professionalize and perfect those sectors that contribute most to our economy. It is not necessary to be an economist for, by the nature of human behavior, we have the vital need to take care of that which directly generates our income.
However, when we talk about a national economy, as it happens with public money, the feeling of belonging and that eagerness to take care of one of the most profitable sources of income that our economy has, is seriously dissipated. As I have said, we have even heard the Vice-President of the Spanish Government, Pablo Iglesias, speak of letting a sector fall, which, like the tourism sector, provides the Spanish economy with income that, on the other hand, benefits its GDP on a large scale.
Percentage of GDP contributed by the tourism sector in Spain from 2010 to 2018
Since 2013, the tourism sector is the sector that has generated the most employment in the world. With 20% of the employment generated since that year, we are talking about a sector that has generated two out of every ten jobs that have been generated on our planet; hence its great contribution to employment. But we are not only talking about that, but also about a sector that has the capacity to adapt to any scenario, however recessive it may be. A sector which, throughout history and despite the recessions which have shaken the various economies, has resisted its growth; a phenomenon which explains the deterioration which other sectors have suffered, giving greater importance to a sector which, at a time when all sectors were falling apart, was continuing to grow.
The solution to this, as we see, is not to discard a vital sector for our productive model. Rather, it is to perfect and model a sector which, if it does so, could not only increase its contribution to the economy, but do so in a more sustainable way and be able to withstand any shock the economy may experience. Perfecting the sector is the key to its sustainability and to the smooth running of the economy. Discarding a sector that, on its own, has not stopped contributing to the economy, and especially with such an important contribution as this sector has made, is the worst possible mistake.
It is time to talk about reform, not about moving. We must begin to strengthen those sectors on which economies depend so much. For this reason, professionalising and strengthening our tourism sector is the answer. The profitability of a sector that continues to expand its presence in our economy is unquestionable. However, there is room for messages that, like that of the Vice-President, advocate suppressing a sector with great potential, such as the tourism sector. Given its behaviour and the expansion that it is naturally experiencing in our economy, the greatest absurdity we can commit is to slow down the growth of the only sector that shows this capacity for growth, in addition to doing so without stimuli and with added repression.
”Francisco Coll MoralesEconomist