Covid-19's alarming impact on the economy
By Khatia Bzhalava
Tuesday, March 10
The novel Coronavirus has had a significant impact on tourism all around the world, including Georgia where tour agencies and hotels suffer from diminishing the number of tourists. Significant 80% of the bookings have been canceled in March, without any perspective of improvement in April.
Due to the epidemic, bookings were massively canceled by tourists from Russia, Azerbaijan, and countries of Europe. For the workers in the sector, it was clear and predictable that March would bring a failure, but what concerns them more is that not much more is expected in the following month.
Hotels are having problems paying salaries to the staff, so they either have to make their employees redundant or give them unpaid vacations. As the founder of “the Federation of Hotels and Restaurants” Shalva Alaverdashvili states, there is a possibility that 50 thousand people out of 100 thousand, who work in the sector, will be left unpaid.
China was supposed to play a huge role in the economics of Georgia tourism in 2020. Last year, Chinese tourists took 7th place on the scale of 10 top spenders in Georgia. On average, they spent 2.253 Georgian Laris per visit, which overall benefited Georgia with more than 100 million. Considering the existing situation, the Georgian economy is likely to expect a loss of millions of US dollars.
However, since Georgia is one of the safest traveling destinations, the National Administration of Tourism hopes that as soon as the virus fades away, potential tourists will be keener to choose Georgia as their destination.
Airline companies are in no better situation, as flights between most countries are being canceled. With the information of IATA (International Air Transport Association) due to the widespread of the coronavirus, International Aviation has already suffered the loss of 4.9% in just two months, and yearly rate might reach 13% which means the overall decrease of $113 billion for the aviation sector
The chief economist of IATA tells the press that the industry remains fragile.
“There are lots of airlines that have got relatively narrow profit margins and lots of debt and this could send some into a very difficult situation.”
Since China is world's second-largest economy as a leading trading nation, a slump in its economic will bring negative consequences to the rest of the world and economists predict that China’s economic growth, in the first quarter of 2020, will drop to 4,5% from 6%, which seems to be the slowest pace since the last economical crisis.
China is the biggest oil importer and the coronavirus outbreak might cause the first drop in global oil demand in the last decade.
As the workers of some factories are warned to stay at home to help reduce the spread of the virus, there is a shortage of products and parts from china that affects companies all over the world. Companies such as Apple, Hyundai, and Nissan are facing production delays.
Many trade shows and sporting events in Asia and across the world have been canceled or postponed.
However, economists have faith that China’s economy will recover quickly if the virus could be contained.
