UNCTAD: Croatia Among Three Countries Hardest Hit by Tourism Drop

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ZAGREB, July 2, 2020 – The world’s tourism sector could lose at least $1.2 trillion, or 1.5% of the global GDP, due to a standstill of nearly four months caused by the coronavirus pandemic, UNCTAD says in its latest report, and Croatia is among the countries whose GDP might suffer the most from tourism losses.

In the report, published on 1 July, the UN body on trade and development addresses the economic fallout of the global COVID-19 pandemic, estimating losses in three scenarios, depending on the duration of the break-in international tourism – of four, eight and 12 months.

The loss could rise to $2.2 trillion or 2.8% of the world’s GDP if the break-in international tourism lasts for eight months, while in the most pessimistic scenario, a 12-month break, it could reach $3.3 trillion or 4.2% of global GDP, UNCTAD estimates.

“Tourism is a backbone of many countries’ economies and a lifeline for millions of people around the world, having more than tripled in value from $490 billion to $1.6 trillion in the last 20 years,” the report says, citing UNWTO data. “But COVID-19 has brought it to a halt, causing severe economic consequences globally,” it adds.

Even as tourism slowly restarts in an increasing number of countries, it remains at a standstill in many nations. “For many countries, like the small island developing states, a collapse in tourism means a collapse in their development prospects,” said UNCTAD’s director of international trade, Pamela Coke-Hamilton.

Jamaica, Thailand and Croatia top three of 15 most affected countries

Analysing the impact of tourism losses on the industry’s share in the national GDP, UNCTAD estimates that Jamaica and Thailand might lose 11% and 9% of GDP respectively.

According to UNCTAD’s moderate estimates, Croatia could lose 8% of GDP, while Portugal could lose 6% and the Dominican Republic 5%.

The 15 most affected countries also include Kenya, Morocco, Greece, Mauritius, Senegal, Ireland, Egypt, South Africa, Malaysia and Spain.

UNCTAD warned that the tourism sector would also come under pressure in many rich countries, citing popular European and North American destinations, including France, Italy and the United States.

Impact on jobs and wages

UNCTAD estimates show that in the worst-affected countries, such as Thailand, Jamaica and Croatia, employment for unskilled workers could decrease at double-digit rates even in the most moderate scenario.

In the case of wages for skilled workers, the steepest drops could be seen in Thailand (-12%), Jamaica (-11%) and Croatia (-9%), in the optimistic case, doubling or tripling in the worst scenario.

The effects could be particularly negative for women, who are expected to be disproportionately affected by layoffs in tourism due to COVID-19, according to the report.

Women are more likely than men to be entrepreneurs in tourism and make up about 54% of the workers in the accommodation and food services sectors. And because many women in the sector work informally in low-skilled jobs, they are less likely to have unemployment benefits or other safety nets.

Governments urged to protect workers and support tourism recovery

“Coronavirus-induced losses in tourism have a knock-on effect on other economic sectors that supply the goods and services travellers seek while on vacation, such as food, beverages and entertainment,” the report says.

UNCTAD called for strengthened social protection in the affected nations to prevent the worst economic hardship for people and communities that depend on tourism.

It urged governments to protect workers. “Where some enterprises are unlikely to recover, wage subsidies should be designed to help workers move to new industries,” the report says.

“Governments should also assist tourism enterprises facing the risk of bankruptcy, such as hotels and airlines. One approach for financial relief is low-interest loans or grants,” UNCTAD said.


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