Covid-19 may cause $3.6bn loss to GDP: World Bank report

Updated 10 Jul 2020

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The coronavirus outbreak has put at risk 880,000 jobs in the tourism sector of Pakistan. — AP/File
The coronavirus outbreak has put at risk 880,000 jobs in the tourism sector of Pakistan. — AP/File

ISLAMABAD: A new World Bank policy brief on the tourism sector of South Asia estimates that the potential loss to Pakistan’s gross domestic product (GDP) due to the impact of Covid-19 pandemic would be $3.64 billion, while Khyber Pakhtunkhwa province is likely to suffer $10 million to $20m in losses.

The policy brief, ‘Covid-19 and Tourism in South Asia’, further estimates that the impact of coronavirus outbreak has put at risk 880,000 jobs in the tourism sector of Pakistan.

The highest impact of Covid-19 pandemic is on India which faces a potential loss of $43.4bn to the GDP, followed by Nepal with potential loss of $460m and the Maldives $700m to the GDP.

A summary of Covid-19 tourism response activities by the Pakistan government lists cash grant or subsidies, tax rebates/relief/extension, fee/bills waivers, tourism communications or crisis task force, support for industry to address contamination, repurpose tourism assets for crisis operations, national carriers waiving cancellation fees and maintain cargo operations of national carriers.

Statistics in the World Bank brief show that the do­­mestic spending percentage of the whole economy GDP in Pakistan on tourism is 4.09 per cent, while the percentage of flow of South Asia intraregional visitors placed Pakistan at 3.25pc. Highest 63.94pc is of India, followed by Bangladesh 13.02pc, Sri Lanka 11.19pc, Nepal 6.22pc, the Maldives 2.37pc and Bhutan 0.01pc.

The World Bank policy brief says South Asia is high­­ly dependent on travel and tourism, especially as a generator of jobs — 47.7m jobs were created in 2019. With fewer economic optio­­ns, the Maldives archipelago is particularly dependent on tourism, while other South Asian regional countries have more diversified sources of the GDP, including agriculture and remittances.

The report says that the impacts of the pandemic will likely mute the demand for travel and tourism services for at least six to nine months, and recovery will likely take twice this time. Domestic tourism and drive-to-markets are likely to be the first to recover, and intraregional travel bet­ween “Covid-19 safe zones” is likely to be the next markets that rebound after domestic travel.

The pandemic is affecting nearly 47.7m travel and tourism jobs across South Asia, many held by women and vulnerable communities working in the informal sector. Losses of over $50bn in gross domestic product in the region are expected in the travel and tourism sector alone as a result of the crisis.

Published in Dawn, July 10th, 2020