Foreign Policy, By Colm Quinn
Many island nations rely on foreign tourists, but the world’s major economies will also see drastic declines in spending as the coronavirus shuts down travel.
As the coronavirus pandemic keeps billions of people at home, one sector is undergoing an immediate crisis: tourism.
According to the nonprofit World Travel and Tourism Council, which represents the international tourism industry, travel and tourism contributed $8.8 trillion to the global economy in 2018 and was responsible for 10.4 percent of all economic activity. The council estimates that travel and tourism are responsible for 319 million jobs around the world.
With governments locking down their borders and people around the world staying home for weeks to help stem the spread of the coronavirus, several companies are struggling to survive. At least three regional airlines have filed for bankruptcy in the United States and United Kingdom. To stave off collapse, U.S. carriers have accepted $58 billion in loans and payroll grants as part of the U.S. government’s stimulus package. The pandemic has caused bankruptcies in the cruise industry too, and cruises’ reputation for hassle-free travel has surely taken a hit.
Which countries stand to lose the most? In the chart below of the world’s 20 biggest economies, Thailand and the Philippines rely on tourism for more than a fifth of their GDP. Two of the worst-hit countries in the coronavirus outbreak, Spain and Italy, also depend heavily on this sector. The country that relies on tourism the least—South Korea—is also handling its outbreak the best.
In absolute numbers, tourism in the United States will see the greatest losses—in large part because of the size of the economy. Six of the world’s top 10 countries by tourism receipts are also ranked among top 10 countries for most coronavirus cases, suggesting a strong correlation between rates of travel and the spread of infections.
The most severe economic devastation, however, will likely be seen in the small island nations that have staked their entire economies on overseas travelers taking in their beaches and resorts. Of the top 20 countries most dependent on travel and tourism as a source of GDP, 15 are small island nations. Iceland, whose economy suffered a deep decline during the 2008 financial crisis, stands to lose again, as more than a third of its GDP comes from travel and tourism.
Andrew Fahie, the premier of the British Virgin Islands, has remained upbeat despite the expected downturn. “Our tourism industry has faced many crises before, from natural disasters to epidemics, and we have always come out strong on the other side,” he said.