UN@75/GVA Dialogue on the COVID-19 impacts on Tourism, Culture, Sports
24 June 2020
Impacts on tourism have been severe and put developing countries, esp. SIDS in a vulnerable position. Air travel is at a standstill. UNWTO predicts a contraction of the tourism sector by 60-80% in 2020. Inklings of recovery are seen only in domestic and regional travel. IATA predicts impact on long-haul travel will last much longer due to reduced confidence and extended restrictions on int’l movement.
For economies dependent on tourism, there are concerns for economic stability. SIDS are among the most vulnerable. On average, the tourism sector accounts for almost 30% of GDP in SIDS. This share is over 50% for the Maldives, Seychelles, St. Kitts and Nevis and Grenada.
The negative effects are disproportionately harsh on women in tourism sector. In SIDS, women represent the majority of low-skilled and casual workers, esp. in accommodation and food sectors, which are particularly impacted by social distancing and travel restrictions. The resulting fall in incomes implies a higher incidence of poverty especially for women. At UNCTAD we predict that in LDCs alone (incl. a number of SIDS), extreme poverty will grow by some 70 mn people this year – 1st increase in 20 years.
Weathering the economic storm by relying on additional debt or foreign reserves isn’t possible for indebted, undiversified SIDS. The external debt of SIDS accounts for 72.4% of their GDP on average. UNCTAD estimates that SIDS alone need $5.5 bn to counteract effects of the pandemic.
Debt relief in particular will be paramount to the recovery of SIDS tourism prospects. Many tourism dependent SIDS are middle income countries and therefore do not qualify to for existing debt relief initiatives. Access to debt moratorium measures should include these countries.
Policies should target all stakeholders w/in tourism sector: employees, own-account workers, and enterprises. Measures should incl. income support, sectoral funds, social security and fiscal exemptions or deferrals, fast and subsidized loans, relaxation of regulations and taxes on travel and tourism activities.
UNCTAD sees tourism among the broader set of creative industries badly hit by the crisis. Vital outlets for creative entrepreneurs were closed. Art galleries, restaurants, cinemas and museums closed, and concerts were postponed indefinitely.
But digital innovation can drive the upside in the recovery. Demand for creative goods and services – delivered digitally – has been very high during the COVID-19 quarantine period. Demand for digitally delivered creative products has surged during the quarantine. To deliver their services, creative entrepreneurs have turned to digital platforms.Netflix added 16 mn new subscriptions during Q1 2020 – double their projected estimates for the period. Audible, the audio book application, made hundreds of titles completely free, mainly for children. TenCent saw surges in mobile game downloads.
The research segment of the creative economy is also getting a boost. Academic knowledge giant, JSTOR made its database of research accessible to the public and creative MOOCs (or “massive open online courses”) are booming. This represents a near-term boom for both the channels and platforms, and by extension creative businesses in the digital space.
With creative industries shifting modes of supply to digital platforms, for many developing countries this transition may not be as smooth. Adoption of digital technology and sector specific financial recovery for creative entrepreneurs is crucial. Financial assistance should also support moving up the creative supply and value chains to boost the resilience of the sector to external shocks. This is especially relevant to some developing countries which may not have had the opportunity to diversify their creative sectors.
