UNCTAD virtual Press Conference 01 July 2020

Ladies and gentlemen, thank you very much for joining us today for these virtual press conference by Antwerd.

We are presenting today a report that provides an assessment of the economic consequences of the COVID-19 pandemic in the global tourism sector.

Our speakers are Mr Ralph Peters, who is the Chief of the Trade Information Section in our Division of International Trade and Commodities.

He attacked.

He'll be joined by Mr Carlos Razzo, who is the chief of the Office of the Director in the same division.

We apologise that the Director, Miss Pamela Coke Hamilton, could not join us for this press conference.

I kindly request you to indicate your name and the name of your organisation so that we can identify you in the system.

So we will start with the presentation and then we will open the floor for questions, at which point I'll request you to raise your hand in the system and we will give you the flow.

So I'll hand over to Mr Raph Peters and Carlos Razzo to make the presentation.

Thank you very much, Dan.

Welcome, everybody, and thank you very much for your interest in our report.

As Dan mentioned, Director Coke Hamilton cannot be here today.

She's not, she's unwell.

But Ralph and I are here to answer your questions or at least try to do so.

Well, the tourism industry is one of the sectors that has been severely hit by the COVID-19 pandemic and its effects are massive throughout the the the economy.

This is a sector that has grown exponentially in the last five decades.

It's a sector where we all have contributed to, if you think about international tourism rivals in the last 50 years, it has gone from less than 200 billion to 200 million to more than 1.5 billion arrivals last year.

And in doing so, it has become an important source of income and employment for many countries, particularly developing countries.

It's become a lifeline for millions of people all over the world.

And this shows the importance of the sector in, in our efforts for sustainable development all over the all over the world.

The but this is not only a developing country story, as you can see in the report also many developed countries are severely affected by that.

In fact, in terms of value, the US is one of the most affected countries according to some of our scenarios.

And and also the top touristic destinations are developed countries, It's France, Spain and the US.

So it's a sector that affects all countries all over the all over the world.

But about, about the study, I think there is no worse time to be a forecaster or trying to, to predict the future than during the COVID-19 crisis.

The, and therefore what we did was to build 3 different scenarios about what could happen to the tourism industry during this pandemic.

The first scenario, and I will not go too much into details so that Ralph can expand if needed, is we assume what will happen to the industry if there was a four months lockdown that restricted all tourism around the world.

Just doing that shows that the impact of the tourism sector is massive in the global economy and this is important to notice and this is I think this is one of the main results of the report is to highlight the importance in the tourism industry because it is so often overlooked.

And So what happens next in terms of the cost?

So under scenario, under scenario one in the which is the most moderate scenario of four months, we already estimate the loss of $1.2 trillion in the global economy.

But So what happened next depends of a set of factors, what is consumers disposable income, their confidence lockdown measures, but also what is happening in the system in the markets that allow tourism to happen.

I think I'm I'm sure you have heard about the situation in Lufthansa and the financial support it has received.

Probably you have heard as well that Air Canada is already closing some, some roads in their markets.

But probably you have heard less about about the LIAT, a small company, a small airline company in the Caribbean, which is responsible for the bulk of travel in the in Caribbean islands.

This company is going to go bankrupt.

So once this thing happens, even if COVID-19 goes away, we need airline companies or transport companies that help moving the tourists from one side to the other.

So there are a set of conditions that might restrict the, the, the take off of the airline industry and and travel.

Another important result in the probably what I consider one, the most important result relates to what we call linkages.

Tourism is, is much more than what you then sometimes what we perceive is much more than the hotel we stay or the beach we visit.

It has to do with the museum we visited in Paris, the the business travel you made to the US and the taxi driver you hire.

It has to do with the spectacle you went in to see in your last destination, or the agricultural products that go into the Palaeja you ate in Spain, the Mollet you ate in Mexico, or the apartheid that you ate in Thailand.

So all these connections between these sectors and the tourism industry is what we economies call linkages.

And what the report shows is that these linkages are very strong.

And the the the report summarises this in a very powerful way.

For every dollar lost in tourism expenditure, it costs 2 to $3.00 to the national economy of of our country.

So this is these linkages is very important and this also reflects why when the tourism sector is hit, it creates ways that negatively affect the whole economy.

Depending on this level of linkages with employment and wage with an with an impact in on wages and employment that can be massive in some countries.

As you can see in in the report.

The one of the things I think is important to highlight is that the tourism sector has been a champion of gender of women and economic empowerment and this effects unemployment in the tourism sector and on wages are going to hit women more severely because tourism tends to employ a higher share of women in comparison to other sectors.

So this means critically important that the sector is supported to support any effort to for gender, gender empowerment across the world and particularly in those countries where tourism is vital for their economies, for example in the small island development, development states.

So one of the conclusions of the report is that the sector needs to be supported for all what I've mentioned to you already, the linkage test, the story, the the wage affects, the employment affects the impact on GDP and there are different ways to do so.

Some of them could be through subsidies, either financial relief grants or lower interest rates.

And, and this is important, as I said, for I could probably conclude for two reasons, because tourism makes the world not only healthier, but happier.

So we all have incentives for the tourism sector to to take off again.

And I will stop here and then I'll pass the the floor to my colleague, Rush Peters.

Thank you very much, Carlos, for this introduction and thank you very much for for your interest in this.

So let me give you a few more details of what have we done to make, to quote Carlos, the word happier.

This is based on some joint work we did with Badri Narayan, David Fanzetti under the guidance of our director, Pamela Cook Hamilton.

So we looked at the tourism spectrum because as Carlos mentioned, it's a, it's a major sector in the world, but in specific, specifically in some countries, not only small island developing states, also these developed countries are into it.

Carlos also mentioned some northern popular destinations including France, Spain, United States.

So it's of interest to to a wide range of countries.

Carlos also mentioned that there are specific groups that are employed in the sector, disproportionately many women, often many unskilled labour, young people.

Also migrant workers are involved in tourism sector.

So there were lots of reasons to look into the tourism sector that came almost to a complete standstill in recent months.

Since we don't know how long this halt in tourism will continue, we looked into 3 scenarios 1 which we called the moderate scenario.

It's a pretty optimistic scenario because I think we have reached this almost already.

So that is reduction of spending of tourists by 33% on an annual basis.

So that is equivalent to reform and standstill in tourism which in many cases we have already given that the United States, China, many countries closed their borders in in February, March and and many are still are still closed.

So that is the moderate scenario.

The intermediate scenario is equivalent to an 8 month standstill in tourism or a reduction of 66% in spending of tourists.

That is in line with an assessment of the United Nations World Tourism Organisation, who assesses that tourism could be reduced this year by 60 to 80%.

So that intermediate scenario would be in line with the expectation of the United Nations WTO.

The pessimistic scenario assumes that tourism comes to a standstill almost entirely for the for an entire year.

How realistic that is, I don't know.

It's up to speculation.

That probably would only be realistic if if we would really see a second wave coming to countries and and really hitting tourism very hard.

But we may also consider that tourism will not pick up immediately once the standstill is over.

So even if borders would open, tourism may only continue or pick up very slowly.

The some organisations estimate that it will take 19 months for tourism to to pick up and to be at at old levels.

So there is some uncertainty here.

What we did is we used the Global Trade Analysis project model, that is a quite popular global computable general equilibrium model.

And the advantage of this one is that it covers the entire world and that it allows us to analyse the linkages, because in this global model all sectors are linked with each other.

So we can see exactly tourism uses a certain number of food products, it uses a certain number of cars to to maintain the hotels.

So we can see exactly all the intersectoral linkages and then vice versa if tourism declines, we can also see what is the effect on the other sectors in an economy.

So that is a particular advantage of computable general equilibrium model.

The GTAP has 140 countries.

Unfortunately it does not have a single countries.

Many of the smaller island countries which may be heavily affected from this halt in tourism.

So for example most of the Caribbean islands are grouped in one region which is called Caribbean.

So they are not single countries except a few, a few countries like Jamaica which are in the database as a single countries.

Also sectors, we have quite a disaggregation of sectors.

So there are 65 sectors in the model, 2 of which are of particular interest to tourism and that is accommodation, food and services and recreation and other services.

So these are two sectors which are particularly affected by tourism because most of the travellers expenditures are spent in these two sectors.

So what we did is we looked into data coming from the UNWTO and they take the travel expenditures from the balance of payment statistics.

And then we looked into a reduction of the tourist spending according to the three scenarios.

What we found, and Carlos summarised it already, was that there are quite drastic changes in the GDP in employment, wages or the figures we looked at even in the optimistic scenario.

So in the optimistic scenario, the GDP declined in some countries up to up to 11%, in Jamaica 9%, in in Thailand, Croatia 8%, Portugal 6%, Dominican Republic 5%.

So these countries where tourism makes up a **** share in their economy above 20% often and they are very heavily affected by losses in their gross domestic product.

Also, we looked into employment and wages here.

We took the assumption that unskilled labour may lose their jobs if there is a decline in certain sectors.

So that means that we can look into the development of employment in for unskilled labour.

And again here, even in the quite optimistic scenario, there are losses of up to 17%.

In this case, this is Thailand, but also Jamaica may face significant losses.

Since we don't have many of the small island developing countries as single countries in the database, we can assume that many of those countries that have similar **** share of tourism in their GDP are also quite heavily affected by by by the hoard in tourism.

Wages may decline for skilled labour again here by up to 11%.

Most other countries are in the range of of four, 5% where tourism doesn't have such a **** share in the economy, but still quite significant.

The the losses for GDP, employment and wages can go much higher.

And you know, basically it's by a factor of 3 in the in the dramatic scenario where some sectors may be almost wiped out due to to very heavy losses.

What we found and that is an important finding in the study is that it is not only the tourist expenditures which has heavy effect on the economy, but it is these sector linkages that make it really worse.

So what we find is that this multiplier effect in a negative sense multiplies the losses between 2:00 and 3:00.

So for 1,000,000 loss of income, direct income from tourists because that is what they normally would spend for hotels and restaurants.

We find that the economy as a whole loses between 2 and 3,000,000 so much more because there are so many other sectors supplying their goods to the tourism sector, to the hotels, to the recreational sectors.

So that is an important finding here, which as Carlos has said, really calls for a lot of attention to the countries that depends so heavily on on tourism.

We have outlined a few policy recommendations that depends obviously from from on country to country and countries are of course constrained in the way they can, you know, support the tourism sector.

But what we find is that in in the case of such a shock, a generally available Social Security system pays off.

So if the the workers are supported here, who who lose their job with with, you know, out being that being their fault and that the international community has some responsibility here to support these countries in in in such a heavy, heavy time, which is a strong shock for them.

So these are some of the major findings of the report.

And over to you, Dan.

Thank you very much Carlos and Ralph for their presentation.

We would like now to open it up for questions.

I would kindly remind those who have questions to raise their hands in the system and we'll be happy to give you an opportunity to ask a question.

We'll start with Peter Kenny.

Yeah, my name is Peter Kenny.

I'm a freelance journalist.

I'd just like to ask you, apart from the Caribbean island states that you mentioned, is there any particular discrepancy between the tourism sectors impact on developed and developing countries?

Shall I answer directly, Dan?

Yes, please go ahead.

Yes, there is.

There is one difference I think.

And the difference is that we have very popular tourist destinations also in developed countries.

Even in the the most popular tourist destinations worldwide are Spain, France, United States, China is also a popular tourist destination.

These are countries which have quite a significant impact from tourism, but as a share in their economy and it is much less compared to many other developing countries and that is one major difference here.

So in some developing countries, and this is not only but but most notably the the small island developing countries which have partly shares of above half of the economy coming from the tourist sector that we don't find in some of the developed countries like Spain, France and the United States.

So kind of this is a difference where the economy depends so much on tourism.

Well, we also have this in some of the smaller developed countries like Croatia and Greece, which have a quite **** share in in from the tourism sector.

And as you see, for example, in Figure 3, also Croatia is among the countries that has, yeah, it's really impacted a lot together with Portugal.

So there are developed countries that are heavily affected.

But I would say like the the countries like I'd like Jamaica, Thailand, the small island developing countries, they have a huge share in tourism and are probably more affected.

Thank you very much.

Give the opportunity now to Jeremy Lunch Radio France.

Hi, Bonjour.

OK.

Do you think I can ask my I can get an answer in French or is it better if I ask it in in English?

I I, I can try in French as a place in Francais may talk to you.

It's always better for the for the radio to have your voice in French.

But but English, I'm not sure about that.

English will be fine too.

A quick one I'm I'm thinking is, is is COVID putting an end to the tourism industry as we know it?

Meaning mass tourism and its consequences for the environment and the climate And the countries have to get used to this new normality and maybe learn how to develop a more sustainable tourism industry.

I'm wondering could this be an opportunity or or not?

I, I would like covers to come in 2 answers from my side.

On the one hand, the tourism industry has had shocks before and they have survived and they have, they have, they have always recovered fully.

We had, I mean, there was 911 the financial crisis, we had certain, you know, pandemics on cruise ships.

So and the tourism industry has always recovered.

So in that sense that would, you know, perhaps support the assumption that tourism will recover and we will go back to a strong tourism industry.

On the other hand, I mean, this shock was unprecedented and there's a lot of discussion whether we should change the way tourism was in the past like this.

You mentioned the mass tourism, which is also often not very sustainable for the countries receiving the tourists.

So if there could be a change towards a more sustainable tourism that would be probably good for most parties.

I mean for the environment, it would be positive news.

Also for the countries, it would would often be positive news because they may provide tourism as a service in a more sustainable way, including more domestic producers having a higher share, a higher value addition done in the countries because often tourism, you know, big, big hotels import a lot of the materials.

So it it can lead to a change.

I yeah, I don't know.

I personally find it difficult to to say something, but maybe my colleague Carlos has has a has a good idea here.

Thank you, Jeremy.

I think my my answer will go very much in the same direction as well.

But I do think this is an opportunity for the tourism industry to come back in a more sustainable manner.

I think this space has provided an opportunity to rethink the way we do things and that includes the tourism industry.

I think there is an opportunity to, to work in a more sustainable model and that not does not only include, as I was mentioning the the hotels or, or or the beaches, but also other industries that support the, the accommodation sector, like for example, the airline industry.

This is a right opportunity to revise how the airline industry can change so that the emissions they produce can also be reduced.

And it would be the same for different systems to be able to do more things, perhaps online and less physically so that we can reduce the amount of emissions in the in the sector and also protect better the environment in the in the in the touristic destinations.

Thank you very much.

No, please.

I see.

Peter Kenny, you have a follow up question.

Yes, Mr Peters, you mentioned the fact that the international community can step in to help the global tourism industry.

What aspects of the international community could you perceive doing this and how could they do it?

Yeah, few, few things I think that can be done.

One is these countries that have partly half of the economy built on tourism, which came to a sudden standstill.

They probably need loans from say, the INF.

They have already a programme to, you know, I think it's called catastrophe and I think we we started in the paper.

So there are already some possibilities given by the IMF.

I think that is something that the international community should do.

Also policies related to currency.

Obviously this is a delicate balance here because we don't want the virus to spread again or to to spread any further.

So that has to be a careful approach here.

But I think if if tourists won't travel abroad, if they come back and then they have to go into quarantine.

So here a coordinated approach really that takes into account obviously recommendations by WHO and other measures to limit the spread of the virus is very important.

But countries can do something to also allow international tourism anymore.

Again, like in Europe, we we see that, you know, many of the European countries, they have opened their borders for other European countries.

And I think that makes sense because they may not have more cases in the countries where the tourists come from than in their own country.

So if they take the necessary hygiene measures, the, the, the virus may not spread with tourists than than than without tourism.

So I think there are some measures that can be taken here by the, by the international community.

Obviously some countries, I mean, that depend so heavily on, on, on, on tourism.

I mean, they need they need to be supported by, by by the international community by loans and and you know possibilities also to export other products to allow them to diversify into other products than than under normal circumstances.

Thank you very much, Ralph.

Just to go back to Jeremy, our head of communications, our Chief of communications are LED is available to answer your question in French.

If you would, if you would like, would you still like a response in French, Jeremy?

I'm good with the answer in English.

Thanks.

Thanks, Tom.

Thank you.

Maybe if I can add one word to Jeremy, as I mean, it is a tricky situation.

And I, I agree with what Carlos said that this is an opportunity to get into more sustainable tourism.

And I think this is really the way that should be considered.

Here it is difficult because many of the popular tourist destinations in developing countries are quite remote from the main sources of tourists.

Most tourists come from the United States, China and Europe, and they are quite far away from many islands like Mauritius or other tourist destinations.

So air travel is obviously here required to bring tourists to to these islands.

So in that sense it is, it is a, it is a difficult balance here to really, you know, make tourism more sustainable by having perhaps more regional tourism than international tourism.

But from for many small added developing countries it is a challenge.

So there seem to be somehow a trade off a little bit between economic and environmental recovery here.

Obviously what, what is important is to, to make a good balance here so that these countries don't lose in the economic development.

You know why?

Why we we have important environmental objectives.

Thank you.

Ralph, do we have any other questions?

I do not see any raised hands.

I see.

Peter, you have another question.

Go ahead.

Yeah.

I mean, yes, people are talking about sustainable tourism, but isn't sustainable tourism just going to be one of the unintended consequences of the COVID-19 pandemic rather than something that's going to force the hand?

Paras, would you like to take this off?

Yeah, I'm, I'm, I'm not sure if I get the, the question correctly, but I think at least in my view, even if it is is sustainable, tourism is an unintended consequence.

So if even if it is an unintended consequence of COVID-19, I think it should be welcome.

And any incentives it provides the economy to change the way in which we operate so that this can make the industry more sustainable to to provide a source of income that is stable in the long run, especially for coastal communities or poor communities that depend on tourism.

But I think that that would be our welcome, our welcoming news.

Thank you, Carlos.

Any other questions?

I still don't see any raised hand.

Any more questions?

OK, it looks like we don't have any further questions.

So I'd like to thank you all for being a part of this virtual press conference.

Thank you, Carlos and Ralph for the presentation.

Thank you, everybody.

And just to remind everyone that Carlos and Ralph and no other experts are available.

Should you have further questions after the press conference or if you'd like any clarifications, please feel free to reach out to us and would be happy to provide additional information.

So thank you all and have a good day.

Thank you, Ben, and thank you everybody.

Thank you.

Goodbye.

Bye.