Covid-19 briefing

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- ECONOMIC IMPACT -

Latest update: 16 December 

According to Nomura, India is poised to be the fastest growing Asian economy in 2021 with real GDP growth forecast at 9.9%, while China's is at 9% and Singapore at 7.5%

According to the World Trade Organization, merchandise exports declined by 21% in Q2 2020 and exports of commercial services were down by 30% during the same period

-3.8%

 The consensus forecast for global GDP growth in 2020 is at -3.8%

0.4%

Real GDP growth in the UK slowed to 0.4% in October from the 1.1% growth recorded in September 2020

Impact of Covid-19 on Travel and tourism

- SECTOR IMPACT: travel and tourism -

Latest update: 16 December 

International Travel Impact

174m

174 million jobs in the travel and tourism sector will be impacted by Covid-19, according to the World Travel & Tourism Council (29 October)

2,000

On 30 November, Qantas announced the loss of 2,000 jobs, on top of 6,000 roles already announced earlier in the year

Reinventing city transport

Covid-19 has provided cities with the momentum to rethink their approach toward urban space. Bogota, Berlin and Milan all announced they would retrofit streets to ensure social distancing during essential travel while preventing an increase in single-car use.

The switch to remote working has led to a huge shortfall in revenue for city transport authorities as Covid-19-fearing commuters shun trains and buses. New York’s transport authority estimates its losses are between $7bn-$8.5bn.

The rapid shift to remote working has had a dramatic impact on local transportation. The natural rhythm of city transportation – two commutes and two school runs – has been disrupted, and city public transportation revenues have collapsed. Transport for London (TfL) passenger numbers fell by about 90% during the UK lockdown, a $4bn reduction in revenue.

Covid-19 will force a new future on cities. Social distancing measures may destroy low-cost tourism in many cities. Public transportation must be redesigned. Public interactions in open spaces must change. City officials must reprioritise their investments with much lower revenues.

Key Travel and tourism developments

Demand remains extremely subdued and the scaling back of planned flight increases shows that the uptick has not materialised to the extent that was hoped for. The key summer period has now passed in many countries and renewed travel restrictions and quarantine measures have checked any momentum that was building, and it now seems the Christmas travel period will be impacted, damaging VFR travel in particular.

October saw new lockdown measures across much of Europe. A month-long nationwide lockdown was announced in England, after France, Czechia, Germany, Italy, Poland, and Portugal all announced more stringent restrictions and this will obviously impact demand. These measures are continuing into December either unchanged, or in a modified format (such as the UK's tier system).

Confusion and dissatisfaction over refund policies are also at play as people become increasingly concerned about their finances. Ryanair will not offer cash refunds for people that choose not to fly on a flight that is operating. They will instead be permitted to re-book to a flight at a different time for no fee.

Despite all the gloom surrounding the industry at present, Airbnb has started its investor roadshow. Many are predicting a blockbuster IPO as the short term rental market bounces back quicker than traditional hotels thanks to its natural lean towards social distancing. The Wall Street Journal has reported that Airbnb is planning to target a range of $30bn to $33bn.