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Global economic & tourism after covid-19 pandemic: a review paper
Article in Journal of Public Value and Administration Insights · December 2020
DOI: 10.31580/jpvai.v3i4.1557
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Research Article
Global economic & tourism after covid-19 pandemic: a review paper
Farzana Afrin Shikha1*, Ashikul Hoque2, Mohammad Waliul Hasanat3, Md. Ikram Hossain4,
Prof. Dr. Abu Bakar Abdul Hamid5, Prof. Dr. Huam HonTat6
1,2,3,4,5,6
Putra Business School, Universiti Putra Malaysia, Serdang, Selangor,43400. Malaysia
Submission: 10 August 2020 Revised: 15 december 2020 Accepted: 17 December 2020
ABSTRACT
The current study is going to involve several discussions and facts regarding the effects of Covid-19 on the global economy
as well as the tourism industry. Based on the records that have been found out, the global economy is in a terrible position
and most of the nations have entered the recessionary phase. In accordance with the implementation of secondary research
methodology data and results regarding the impact of Covid-19 have been collected from different journal articles, research,
online articles, and necessary readings. Based on the data collected from different sources, the findings can be provided as
follows an increase in the per capita GDP annual contraction to 92.9% and the stock markets have crashed and are facing a
crucial time at the moment. Due to these major challenges faced as traveling has been restricted due to the widespread of this
global pandemic since many countries, as well as cities and other locations, have closed their borders to avoid transportation
facilities. Throughout all countries, all flights are canceled and the global tourism industry is stagnant, which increases the
possibility of losing a job for employees. It affects the normal well-being of people who are directly and indirectly involved
in the global tourism sector. Hence, in this pandemic situation, the side-effects of the coronavirus are tremendous and have
massive implications in the long run for the tourism industry.
Keywords: Coronavirus, economic health, annual contraction, unemployment, restriction, tourism, pandemic
1. AN OVERVIEW OF GLOBAL ECONOMY, TOURISM, COVID19 PANDEMIC
In the present world, the global pandemic of Covid-19 has hit every corner of the world and has devastated
several lives. The widespread of Coronavirus has affected hundreds of thousands of people and drastically
deteriorated their health. The present headcounts who have been attacked by this virus have increased to more
than 13 million and total deaths have crossed 0.58 million people (Worldometers.info, 2020, 17th July 2020).
This is a situation of crisis where every individual is prone to get affected by this virus and has terrorized each
individual to their soul.
It is not only about the physical health of the people who are living on this planet, but the effect of this
pandemic has been so strong that it has affected several other factors as well. One of the most important factors
after the physical health of an individual is the economic health and well-being of a nation as well as the entire
globe. Due to this widespread of this pandemic virus throughout the world, every economy present in this world
has been affected and several out of them have even entered the phase for recession. On the basis of the
collected records, it has been found out that the world has not experienced this type of pandemic in centuries
and at present, the per capita GDP annual contraction has increased to 92.9% (Worldbank.org, 2020).
Accordingly, it can be said that this is a moment of tremendous disaster and every other active economy of the
world is affected due to this scenario. The graphical representation provided below clearly indicates the rise in
annual contraction of per capita GDP. Within a period of 30 years class boundary, it can be seen that the world
has experienced several fluctuations in this case. However, the annual contraction that is being faced by the
people in this period due to Covid-19 has been the highest in the history of 150 years (Worldbank.org, 2020).
Journal of Public Value and 10.31580/jpvai.v3i4.1557
Administrative Insight, 2020
Journal of Public Value and
Administrative Insight
Journal Homepage: http://readersinsight.net/JPVAI
Figure 1: Per capita GDP annual contraction of economies
(Source: Worldbank.org, 2020)
Among the variety of sectors that operate in the world, it can be stated that the tourism industry is the
one with the most adverse impact on it. This is because due to the widespread global pandemic and restricting
the traveling policies and laws of every nation, the tourism industry is at a high threat. Moreover, people
working in those sectors are even prone to losing their jobs and biome unemployed for this period. Accordingly,
they will have no income to spend eventually become broke. The consequences of Covid-19 have been severe
and especially on the tourism industry and it cannot be forecasted when this pandemic will come to an end so
that this industry can be revived from the present situation.
1.1. OBJECTIVES OF THE STUDY
● To identify the impact of Covid-19 on the economies of the world
● To evaluate the situation of the global tourism industry due to widespread global pandemic
● To highlight the challenges faced by the tourism industry at the present
● To recommend effective measures so that the condition of the tourism industry can be improved and
overcome the present challenges due to Covid-19
2. METHODOLOGY
Presently it is a situation of the global pandemic that has terrorized each person of this world and
therefore, the study has been confined entirely on secondary data. In this situation, it is not possible to collect
primary data directly from the field of research. Therefore the only option has been to rely upon the data that can
be collected indirectly from the secondary sources. Some of the sources that have been taken into consideration
for conducting this study include websites, newspapers, journals, and articles. Moreover, the prime resource for
getting access to these fields has been the internet.
Since it is secondary research and the data has been collected indirectly, therefore, only the sources that
authentic and reliable have been taken into consideration. All the other sources that cannot be relied upon have
been neglected. Moreover, it is also being mentioned that none of the data represented in this study has been
manipulated or disturbed from its originally collected value and the unbiasedness and authenticity of the study
has been maintained efficiently. Moreover, this study does not consist of any quantitative data and therefore did
not require any quantitative analysis methods. However, in order to analyze the obtained data, themes have been
developed and the findings have been portrayed accordingly.
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3. REVIEW OF LITERATURE
3.1 WORLD ECONOMY AFTER COVID-19 OUTBREAK
Figure 2: Impact of Coronavirus on the stock market since January 2020
(Source: Jones et al. 2020)
Based on the graphical representation of the stock market including three significant operators of the
world, i.e., Nikkei, Dow Jones, and Financial Time Stock Exchange, it can be seen that the impact of the global
pandemic started by the mid of January where the effect was considerable. Along with the progress of time in
this year, as explained by Jones et al. (2020), the value of shares started to decrease drastically with a steep fall
in the value of shares by the end of March. From the beginning of April, the markets have taken hold of the
situation and making necessary efforts to make the situation better. It can be seen that there has been a rise in the
trend since then, but it still has a negative value and the fluctuations are high as well.
Figure 3: Increase in unemployment from January to June 2020
(Source: Jones et al. 2020)
Having employment in this situation of the global pandemic has become a significant concern for every
individual belonging to the workforce of the respective nation. Since all the economies have entered the
recessionary phase, several firms have started to terminate their employees to reduce the overall company cost
(Gössling et al. 2020). According to the diagram provided above, seven significant countries have been taken
into consideration and the increase in the unemployment level has been represented accordingly. Based on the
trend, it can be seen that the US is suffering from the highest increase in the unemployment rate, whereas Japan
has controlled it to the least difference.
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Figure 4: Total Number of daily flights
(Source: Jones et al. 2020)
The trend that can be seen in the above diagram, it can be inferred that the global pandemic has forced the
economies to reduce and restrict travel across the country and internationally as well. Based on this fact, it can
be said that the tourism industry has been deeply affected due to this reason, domestic as well as global (Oecd-
ilibrary.org, 2020). Due to the fall of income in the tourism industry, the countries that have a substantial
contribution from this sector are also facing a fall in the GDP of the respective economies (Irfan et al., 2017).
3.1.1 OTHER INDUSTRIES THAT HAVE A MAJOR IMPACT OF COVID-19
According to the previous discussions, it can be stated that the tourism industry of the globe has been
affected profoundly due to the global pandemic. However, there are other industries present in the market as
well who have faced severe downturn of events due to this widespread of Covid-19 include oil and natural gas,
industrial materials, food and beverages, and mostly the manufacturing sectors. According to Oğuz et al. (2020),
this has been the situation since most of the firms and industries have been shut down for the time being to
contain the chances of spreading this virus even further. Adding up each impact, it can be said that the inflow of
income for the nation as well as private individuals have decreased enormously. Therefore it can be stated that
this is a severe issue for the economic health of every nation as well as the individual families.
3.1.1.1 Further signs for the effect on the economy
Apart from market trends, several macroeconomic factors indicate that global economic health is in
severe danger. One of the significant indicators is the aggregate demand for commodities. During this pandemic,
the aggregate demand for goods has decreased at a very sharp rate since people are avoiding purchasing goods
and services that are available in the economy such as clothes, electronics, furniture, etc. Instead, as influenced
by Duffin (2020), the demand has increased for daily essentials and necessities such as food, medicine, and a
few others. Accordingly, the overall income of the nation from domestic as well as foreign trade has decreased
at a massive rate and the GDP level has fallen to the lowest. Apart from this, the demand for a variety of
services has also reduced as well including flights, hospitality, and public transport. Hence, in an overall
context, it can be said that every economy is suffering due to the global spread of this virus and facing the worst
situation in the history of the world in centuries.
3.1.1.1.1 Problems
During this time of global pandemic and the widespread of Covid-19 in every nation, it can be seen that
the tourism industry is one out of the others that are presently suffering from the negative externalities of this
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effect. According to statistics, it has been found out that nearly 96% of the tourist destinations have gone into
total lockdown, as mentioned by UNWTO (United Nations World Tourism Organization)
(Economictimes.indiatimes.com, 2020). To control the spread, the respective regions as well as the countries
have restricted travel to and from this place and also updated their traveling policies.
As mentioned by Faus (2020), the World Travel and Tourism Council has also provided a warning
beforehand that approximately 50% of the jobs associated with the tourism industry might be at stake. Out of
every continent of the world, Europe and America seem to be the ones that have been affected the most. Even
after the outbreak of this virus is mitigated from the world, it has been forecasted that the tourism industry will
require a minimum of 10 months to make a recovery from this situation. Moreover, according to Faus (2020),
this industry accounts for nearly 10% of the GDP contribution of the globe. Hence based on these facts, it can be
said that the side-effects of the coronavirus are tremendous and has massive implications on this sector in a
negative manner.
4. FINDING AND SUGGESTIONS
Based on the discussions that have been made in the above sections, it can be said that the entire world
has become a victim of the widespread global pandemic of Covid-19. The implications of this virus on the lives
of every individual have been severe and it can be accounted as the prime reason for the downfall of the
economic performance of each nation that exists in the world (Nicola et al. 2020). The impact of this pandemic
has been so adverse that several nations of the world including the developed as well as the developing ones to
enter into the phase of recession and therefore experience a stagnant economy at present. Accordingly, there are
very few or no transactions taking place in the daily lives of the people and eventually reducing the efficiency of
the entire economy.
Apart from the context of global as well as the national economy, specifically, the tourism sector has
become the primary victim of this situation. Moreover, it cannot be said based on the present situation that when
this threat is going to end, and therefore, it has to stay inactive for an undefined period. As explained by Bakar
and Rosbi (2020), the people associated with this sector have to face adverse situations such as salary cuts or
loss of employment which will eventually lead to increased debts, starvation, and suffering.
Hence, it can be suggested based on the above discussions to maintain social distancing from other
individuals and avoid physical contact as well (Ozili and Arun, 2020). The more severely the people will
maintain this, the sooner will be the improvement of this condition and thus, the world will be able to restore
itself to its original state.
5. CONCLUSION
Several facts and statistics have been retrieved from a variety of sources and it has been found out that
the widespread of the global pandemic has not only terrorized the people of the world but has also been
responsible for decreasing the economic performance of the nations as well. Specifically, it can also be said that
the tourism industry is at its worst position and the implications of this condition are severe on the global
economy as well. This is because this sector is accounted for a contribution of 10% global GDP (Faus, 2020).
Based on these facts, it can be said that nothing is there to be done at present but to wait and maintain the
protocols developed for the safety of every individual and look forward towards an improved future in the
upcoming period.
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