Prolonged Iraqi War Requires Contingency Plans

A prolonged war in Iraq would destroy more than three million jobs in the global travel and tourism industry and eliminate more than $30 billion of economic value (gross domestic product) in 2003, the latest research from the World Travel & Tourism Council shows.

This research, carried out by Oxford Economic Forecasting, was released during the last month’s ITB tourism fair.

In the event this worst-case scenario takes place, the council said public-private partnerships must be ready to develop emergency contingency plans that would help mitigate the impact of events. Key interventions might range from tax breaks to increased levels of investment by governments in security, tourism promotion and infrastructure.

The impact of a prolonged war will not, however, have a uniform impact on all countries. The world’s largest economy, the USA, will suffer a massive shock with an estimated decrease in the economic value of its travel and tourism industry of 3.7 per cent and the loss of 450,000 jobs. But the UK would see the economic value of its travel and tourism increase by 1.0 per cent.

The same is also true for Germany, the world’s third largest economy, albeit with a 0.8 per cent increase. This surprising effect is due to the fact that these economies typically run a travel and tourism trade deficit that would be reversed if the demand for international travel falls.

The overall impact, however, is negative. Developed and developing countries stand to suffer significant loss of economic value and employment on par with the damage caused by the terrorist events of September 11, 2001.

Assuming there is either a diplomatic solution in Iraq or a short, contained war, then it is estimated that, in 2003, the travel and tourism industry will account for 195 million of the world’s jobs, or 7.6 per cent of total employment. The council has posted its 2003 research on its website (www.wttc.org) for immediate access.