COVID-19 pandemic, the war in Ukraine and looming risks for tourism’s recovery

Abstract

For more than 2 years we have been subjected to COVID-19 outbreaks of varying intensities. These shocks, and the resultant containment measures, have severely damaged both societies and economies, including tourism industries. In 2020, global GDP decreased by 3%. Rough estimates of the total economic costs of the pandemic in 2020 approximate 100% of global GDP in 2019 and encompass the recession costs in 2020, growth losses for the period from 2021 to 2030, the costs of fiscal impulses, changes in government debt and the statistical value of deaths related to COVID-19 as well as losses in education and human capital, which have substantially eroded social resilience (Yeyati and Filippini, 2021). The economic downturn triggered by COVID-19 has often been compared with the effects of the Global Financial Crisis (GFC) 2008/09, yet such comparisons are flawed as the GFC resulted primarily from a demand shock, whereas the present COVID-19 crisis is more or less a combination of both supply and demand shocks. Delivery chains have been interrupted and millions of people have lost their jobs, at least temporarily, as government measures forced most businesses to close in order to reduce infection risks. The economic downturn, coupled with high unemployment, severe income losses, burning liquidity problems and the mandated closing of shops, hotels, restaurants and the cessation of air or bus transportation have led to a freefall in demand, especially in tourism. These shocks raise important questions about the resilience of current socio-economic systems in general, and particularly in the case of the most affected sub-system: tourism. Tourism has been hit particularly hard, with international arrivals decreasing by 73% in 2020 (UNWTO, 2022); the main reasons for this development being lockdowns, mobility restrictions and income losses triggered by the pandemic and the enacted containment measures. Data for 2020 show that countries including France, Italy and Spain, which have a relative high tourism share, suffered more substantial GDP losses than countries with a lower dependency on contact-intensive services,