Building post-COVID economies

According to UNWTO, international arrivals dropped by 74%. Moreover, destinations worldwide welcomed one billion fewer international arrivals in 2020 than in the previous year the restrictions levied by countries, notes Sean Lochrie, Assistant Professor, School of Social Sciences at Heriot-Watt University Dubai.

Before the pandemic, travel and tourism (including its direct and indirect impacts) accounted for one in four of all new jobs created globally, 10.6 per cent of all jobs (334 million), and 10.4 per cent of global GDP (US$ 9.2 trillion). Meanwhile, international visitor spending amounted to US$ 1.7 trillion in 2019. Fast-forward to 2020, the industry suffered a loss of nearly US$ 4.5 trillion and reached around US$ 4.7 trillion in 2020, with the contribution to GDP dropping by as much as 49.1 per cent compared to 2019. Additionally, 62 million jobs were lost in 2020, indicating a drop of 18.5 per cent, leaving around 272 million people employed across the sector worldwide, compared to 334 million in 2019.

The industry no doubt has a profound impact on global economies and will continue to be key in contributing to its GDP. Travel and tourism enhances economic revenue, creates thousands of jobs, strengthens a country’sinfrastructure, and encourages a sense of cultural exchange between tourists and hosts. Furthermore, the travel and tourism industry cannot be viewed in isolation. It stands to gain a lot from its unique diversity and the involvement of multiple stakeholders who contribute to its success. The industry has a positive impact on transport income; in the case of foreign travel, airlines observe a significant increase in growth as a result of a healthy tourism production.

The benefits of the tourism industries permeate beyond front-line tourism providers. Transport companies leasing their fleet, enterprises supplying perishable and non-perishable products to the hospitality sector, the retail sector, and financial services are among the industries that benefit from tourism. Traditional services have also become key pull factors for tourists. Medical tourism, for example, is now widely regarded as a
major boost to global economies, with patients travelling to different countries
for treatment.

Similarly, tourism can serve as a catalyst for a country’s overall progress while also yielding societal advantages. To maintain tourism growth, governments must improve a variety of components in order to appeal to both returning and new visitors. While infrastructure development should be related to a country’s overall well-being, many countries focus on enhancing infrastructure, boosting transportation, and improving sanitation in order to attract more tourists.

The economic impact of the travel and tourism industry is difficult to ignore on a worldwide scale, but the tourism industry has also proven to be a major contributor to economic divergence in the UAE. According to Statista’s latest report, the sector will contribute around AED 280.6 billion to the country’s GDP by 2028. Although most countries would take a while to recover from the pandemic, the revival of sectors such as travel and tourism will have a substantial impact on the global economy.