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Effects of Coronavirus Pandemic on Global Economy and Travel

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Contents
Introduction 3
Effects of Coronavirus Pandemic on the Travel 3
Reduction in Travel Revenues. 3
Loss of Jobs 3
Effects on Tourism 4
Effects of Coronavirus Pandemic on the global economy 4

Reduced GDP value

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Unemployment

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Conclusion

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Effects of Coronavirus Pandemic on Global Economy and Travel

Introduction

Coronavirus disease can be described as an infectious disease that is caused by a newly discovered type of coronavirus. Most individuals that are affected by this virus experience mild to moderate symptoms, and they recover without the need for special treatment. This virus is mainly transmitted from one individual to another through aerosol droplets that are generated from exhaling, coughing, and sneezing. Moreover, the droplets are usually heavy and they do not remain suspended in the air. These droplets fall on floors and other surfaces, and this increases the chances of individuals being infected from touching contaminated surfaces. The virus was first identified in Wuhan, China in December 2019. It was declared to be a public health emergency of international concern by the World Health Organization in January 2020. The organization later upgraded its classification to a global pandemic in March 2020. As of the start of March 2021, the condition had 117 million confirmed cases and more than 2 million deaths. Healthcare practitioners have been working to try and reduce the spread of the virus (Watkins, 2020). The preventive measures that have been suggested include the use of face masks, social distancing, and isolation of affected individuals among other measures. Apart from healthcare, the pandemic has also affected travel and global economies, and this is addressed in the paper.

Effects of Coronavirus Pandemic on the Travel

Reduction in Travel Revenues.

The global pandemic has affected travel companies for numerous organizations. At the start of the pandemic, numerous countries imposed travel restrictions to and from countries that were severely affected by the pandemic. This reduced the number of people that were moving from one country to another. Furthermore, organizations in which people worked by traveling to different parts of the world encouraged their employees to work remotely from their homes in an effort to protect them. This further reduced the movement of people around the world. This led to a reduction in the levels of revenues for numerous air, land, and sea travel companies (Asahi et al., 2021). Another way in which these companies lost revenue is that there was a reduction in the movement of cargo around the world. This is because many countries closed their borders to protect their citizens from the pandemic. On resumption of travel operations, many travel companies were required to put in place measures for social distancing which has been proven to help in reducing the spread of the virus. This means that many seats in buses or flights were left unoccupied to comply with the social distancing rules (Lacus et al, 2020). In normal circumstances, these seats would have been occupied by passengers. This has further affected the revenues of travel companies.

Loss of Jobs

Another way in which the travel industry has been affected is the loss of employment for many people. At the start of the pandemic, travel companies whose businesses were successful had employed hundreds to thousands of people. However, the virus led to a reduction in their revenues because of reduced passenger volumes, covid-related restrictions in entering some countries, and the closing of borders. The travel companies were still under obligation to pay salaries to their employees according to their contracts. This led to a reduction in the cash reserves of numerous companies. One of the major cost-cutting measures for some companies was to lay off some of their staff members (Lacus et al, 2020). This led to thousands of people becoming jobless. Moreover, some organizations became bankrupt leading to further loss of jobs for individuals working in those organizations.

Effects on Tourism

Tourism has been one of the most affected sectors by the coronavirus global pandemic. This is associated with numerous factors. The main factor is that numerous countries invoked travel restrictions as they attempted to contain the virus either within their borders or prevent the entry of the virus from other extremely affected countries (Gossling et al, 2020). This affected the movement of people from one country to another. Another factor is that there was reduced traveler confidence as people became afraid of traveling and risking to contract the virus. Tourism was also affected by the slow efforts undertaken by some governments to contain the virus within their ranks. The United Nations estimates that tourism reduced by up to 72% in 2020. This represented nearly 900 million fewer tourists moving around the world. This reduction translates to a loss of 900 billion US dollars that would have been spent because tourists are moving around the world. The biggest declines in travel were experienced in Asia, Europe, and Middle East regions. However, in some regions, there was an increase in domestic travel as companies subsidized fees for the local tourists in an effort to increases their revenues. It is estimated that the reduction in tourism will lead to an economic loss of 2 trillion dollars in the world’s gross domestic product (GDP), and this accounts for more than 2 percent of GDP. It is expected that the efforts of vaccinating citizens will increase the confidence of consumers and ease the restrictions of traveling leading to a recovery of the tourism sector.

Effects of Coronavirus Pandemic on the global economy

Reduced GDP value

The coronavirus pandemic led to a reduction in economic growth. This led to a fall in the global stock markets (Senol & ZEREN, 2020). It is difficult to forecast and document the extent of the economic damage done by the pandemic. However, economists agree that the pandemic has had widespread negative effects on the virus. The initial estimates indicated that the major economies of the world were going to lose a minimum of 2.4 percent of their gross domestic product in the year 2020 (Statista Research Department, 2021). However, the forecasts were later changed to 3 to 4.5 percent. The global GDP was estimated to be 86.6 trillion dollars in the year 2019. This means that a loss of only 0.4 percent may be equivalent to the loss of 3.5 trillion dollars of economic output. The virus has led to dramatic falls in the global stock markets owing to the implementation of measures such as lockdowns, social distancing, and travel restrictions (Statista Research Department, 2021). Furthermore, several governments were forced into giving their citizens’ stimulus packages. This means that the governments increased money in their economies which further led to a reduction of stock values of their currencies (Statista Research Department, 2021). An example is that the Dow Jones recorded its largest fall in a single day of 3000 points during this pandemic.

Impacts on Major Industries

The global pandemic also affected several major industries such as travel, tourism, manufacturing, and exports among many others. The tourism and travel industries were affected because of low traveler confidence, restrictions on travel to specific locations, and the need to implement social distance rules in travel vessels. The manufacturing industry was also affected as several industries shut down their production processes to protect their employees. Furthermore, there were several industries that were deemed to be non-essential by their governments, and this forced their employees to stay home during lockdowns. This led to a significant reduction in the production capacity of numerous manufacturing plants. Another way in which these companies were affected is the loss of manpower. The virus was accompanied by high mortality rates with some countries experiencing upwards of 3000 deaths daily. Some of the people that passed away unfortunately were knowledge workers for many manufacturing companies. The replacement and training of these individuals were expensive for the organizations leading to further losses in their finances. The hospitality industry was also affected severely. Restaurants around the world were forced to suspend some of their services. These restaurants had to depend on deliveries to people’s houses for income. This increased their costs of operation as well as reduced their income as no people were allowed to eat within their facilities. As a result, many restaurants ran out of business, and the owners had to seek alternatives sources of income. The banking sector was also severely affected as people continued to withdraw their savings. The industry experienced high rates of default because people could not afford to pay their loans.

Unemployment

The global pandemic resulted in massive global unemployment. The pandemic resulted in workplace closures leading to more than 93% of workers that were deemed non-essential being asked to stay at home. These resulted in the massive lay-off of employees that were deemed to be unimportant to organizations. Furthermore, many companies experienced a loss of revenues because people were spending money on essential things. These companies turned to lay off workers as a way of reducing their operational costs (Hossain, 2021). The labor market was affected to an unprecedented scale by the pandemic. This led to the loss of numerous working hours. It is estimated that there was a loss of 8.8 percent of working hours globally. This represents nearly 255 million jobs that were lost due to restrictions of the pandemic. Another major contributor to unemployment was a reduction in the salaries of people. There are many companies that introduced salary cuts to control their revenues. Many people received significant salary reductions which led them to quit their jobs and look for alternative sources of income that could support their families. This affected the global economy as there was reduced revenue (Kawohl & Nordt, 2020). It is expected that the world labor force will recover in 2021. However, uncertainties regarding the vaccination programs and poor recovery of other sectors of the economy are still affecting the labor force. This means that it will take years before unemployment levels drop to pre-covid levels.

Healthcare

The healthcare sector was also severely affected by the pandemic. One of the major ways in which this sector was affected was the lack of preparation for handling huge numbers of people. The health care systems in the world were affected by huge volumes of patients. This led to high levels of fatigue for the health care professionals. The high patient volumes increased levels of burnout, stress, and work dissatisfaction leading to an increased number of people leaving their health care professions. Furthermore, many countries had limited amounts of protective personal equipment for their health care professionals. Many of the employees in health care facilities were affected by the condition with some of them passing away. The governments also had to increase the number of employees in health care facilities which was an expensive endeavor. The pandemic also necessitated increased funding to the health care sectors. This affected the economy of the world (Ozili & Arun, 2020). This is because the money that had been set aside for other development projects had to be utilized in containment measures for the disease. Moreover, countries had to further invest in vaccine

Conclusion

Overall, the coronavirus pandemic had affected global economies and travel to a great extent. The travel economy has been affected in several ways. There has been a reduction in levels of tourism because of travel restrictions and low confidence levels among travelers. The travel sector has also experienced a reduction of their revenues owing to the minimal movement of people, reduction in levels of cargo being transported, closure of some international borders, and need to comply with social distancing rules when transporting individuals. Furthermore, the industry has been forced to reduce the number of employees in its rank as a way of reducing costs of operation. The global economy has also been significantly affected. The labor market was affected in several ways. Most companies were forced to reduce the number of employees as they were cutting costs. The employees who were deemed to be non-essential were forced to stay at home leading to loss of productivity. There was also an increased number of people leaving their professions to seek better incomes owing to salary and benefit reductions. The healthcare sector was also not spared. This is because of increased pressure from high patient volumes, loss of lives of health care professionals, and lack of sufficient protective equipment. Finally, governments were forced to spend money set aside for development into the healthcare system for the increasing number of health care professionals and research into efforts for vaccine development.

References

Asahi, K., Undurraga, E. A., Valdés, R., & Wagner, R. (2021). The effect of COVID-19 on the economy: evidence from an early adopter of localized lockdowns. Journal of Global Health, 11.

Gössling, S., Scott, D., & Hall, C. M. (2020). Pandemics, tourism and global change: a rapid assessment of COVID-19. Journal of Sustainable Tourism, 29(1), 1-20. Retrieved from

https://www.tandfonline.com/doi/abs/10.1080/09669582.2020.1758708

Hossain, M. (2021). The effect of the Covid-19 on sharing economy activities. Journal of Cleaner Production, 280, 124782.

Kawohl, W., & Nordt, C. (2020). COVID-19, unemployment, and suicide. The Lancet Psychiatry, 7(5), 389-390. Retrieved from

https://www.thelancet.com/journals/lanpsy/article/PIIS2215-0366(20)30141-3/fulltext

Lacus, S. M., Natale, F., Santamaria, C., Spyratos, S., & Vespe, M. (2020). Estimating and projecting air passenger traffic during the COVID-19 coronavirus outbreak and its socio-economic impact. Safety Science, 129, 104791. Retrieved from

https://www.sciencedirect.com/science/article/pii/S0925753520301880

Ozili, P. K., & Arun, T. (2020). Spillover of COVID-19: impact on the Global Economy. Available at SSRN 3562570. Retrieved from

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3562570

Şenol, Z., & ZEREN, F. (2020). Coronavirus (COVID-19) and stock markets: The effects of the pandemic on the global economy. Avrasya Sosyal ve Ekonomi Araştırmaları Dergisi, 7(4), 1-16. Retrieved from

https://dergipark.org.tr/en/pub/asead/issue/54055/721871

Statista Research Department. (2021). Topic: COVID-19: Impact on the global economy. Retrieved from

https://www.statista.com/topics/6139/covid-19-impact-on-the-global-economy/#:~:text=Early%20estimates%20predicated%20that%2C%20should,3.0%20percent%20to%204.5%20percent

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Watkins, J. (2020). Preventing a covid-19 pandemic. Retrieved from

https://www.bmj.com/content/368/bmj.m810.full