The coronavirus (Covid-19) pandemic has brought tourism and travel to a standstill but new growth opportunities are expected to lead recovery in 2021 and beyond, according to Ian Goldin, Professor of globalization and development at Oxford University.
Speaking during a summit at WTM Virtual on Tuesday, he referred to the pandemic as the “most devastating economic crisis in history –a crisis much more severe than the great depression or the economic turmoil of 2008-2009”.
It’s implication, Goldin said, is very different and we don’t yet know the full extend of it, because many governments around the world have gone to the best of their abilities to prevent its full impact.
Meanwhile, travel and tourism are among the most impacted sectors with business travel suffering severe consequences.
In addition, many airlines have been devastated and this, according to Goldin, is likely to become a “permanent scar” in a number of ways:
First, it will take some time for many countries to open up effectively without quarantines unless the vaccine spreads globally,
Second, new “corridors” will be established and places that are safer to go to than others
Third, business travel will never recover to pre-Covid-19 levels.
“We should expect lower business travel in the future for three reasons: the cost savings, the carbon emission savings and the efficiency savings in terms of time that remote meetings have allowed,” he explained.
“There will still be business travel but most of the people I’ve interviewed say that it’s likely to be 10-20 percent of previous levels,” he said.
Opportunity for growth
Despite the difficulties, there will be new growth opportunities for the travel and tourism sector mainly because, as people move to remote working, their need to come together becomes more intense.
“I anticipate that rather than going to the office people will go to hospitality venues, beaches, ski resorts, and that will create a massive opportunity for site meetings. This will bring new opportunities for a combination of conferences, gatherings, meetings, social networking and fun,” Goldin said.
A rebound in travel and tourism may also be triggered by the desire of people to get together and catch up, party, have fun and experience the places they were reading and dreaming about during lockdown.
“I think we will see a very strong revival in travel & tourism both domestic and international,” he added.
The economic outlook
Looking ahead, world economies have a long way to reach recovery.
According to Goldin, in 2020 advanced economies will experience a decline of around 6 percent with some like the UK reaching -10 percent, France -11 or -12 percent and the US probably around -7 percent.
However, a rebound is expected next year. “The news on the vaccine is good. But even without the vaccine we will see a rebound but at a much lower rate than before the crisis,” he said.
It is estimated that growth will reach 4 percent in advanced economies and 5 percent in emerging markets in 2021.
“It will probably take until 2025 to get back to pre-Covid-19 levels,” Goldin added.
Goldin also provides advisory and consultancy services to the IMF, UN, EU, OECD and numerous governments and companies.
He has published twenty-two books, with his The Butterfly Defect book predicting that a pandemic was the most likely cause of the next financial crisis.