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Review Article | DOI: https://doi.org/10.31579/2690-8808/234
1Department of Economics and Entrepreneurship, Faculty of Research Excellence in Art and Entrepreneurship, Art University of Isfahan, Isfahan, Iran
2Department of Electrical and Biomedical Engineering, Faculty of Engineering and Technology, Shahid Ashrafi Esfahani University, Isfahan, Iran
*Corresponding Author: Hamidreza Shirzadfar. Department of Electrical and Biomedical Engineering, Faculty of Engineering and Technology, Shahid Ashrafi Esfahani University, Isfahan, Iran.
Citation: Narsis Gordoghli, Hamidreza Shirzadfar, (2024), The Destructive Effects of Covid-19 on Tourism, Comparison between Iranian and Turkish Economy, Journal of Clinical Case Reports and Studies, 5(11); DOI:10.31579/2690-8808/234
Copyright: : © 2024, Hamidreza Shirzadfar. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Received: 16 November 2024 | Accepted: 27 November 2024 | Published: 05 December 2024
Keywords: global economic growth; Turkish economy; Covid-19 disease
The outbreak of Covid-19 and its global pandemic has posed many challenges to the global economy in 2020. As the world economy grew for the tenth year in a row, the outbreak of Covid-19 disease struck the world economy, forcing world governments to provide financial support to help it recover. Covid-19, which was first discovered in China in December 2019 and has since spread around the world, has slowed global economic growth and caused a recession in various countries. The International Monetary Fund estimates that the world economy shrank 4.4 percent in 2020 Comparing to the previous year, a decline which is even 0.1 per cent greater than 2009 recession. With the spread of the Covid-19, job creation around the world stopped or slowed down, and many unnecessary activities occurred in most countries of the world, experiencing a wave of unemployment that the world had not seen since the Great Depression, and still high overall unemployment. In some countries, such as China, the level of Covid-19 disease was initially very high, but with intensive care and quarantine, the situation improved somewhat and the unemployment rate was kept low. In this article, we intend to take a look at the destructive effects of this virus on Iran's important economic infrastructure, including energy, tourism, industry and labor, and to compare these effects with the Turkish economy.
The Covid-19 outbreak has claimed about 4.5 million lives to date, almost all over the globe. Compared to the great epidemics in the history of human civilization, since the "black plague" of medieval Europe and the "Spanish flu" after World War I, the Covid-19 can not be considered one of the deadliest epidemics in terms of human casualties [1]. The economic consequences of this disease, however, are catastrophic and, given the recent formation of the international economy and the close links between national economies, the enormous amount of damage it has caused in almost every country in the world is unprecedented in history, given the recent formation of the international economy and the close links between national economies. The emergence of turmoil both in the supply and demand of goods and services, the destruction of countless links in international trade chains, the entrapment of about half of the world's population in quarantine the failure of a large part of transport networks on the national and international scale and numerous paralyzed bussinesses [2], all paved the way for the biggest recession of the last 75 years. According to the World Bank, the economies of developed countries will collapse by an average of 7% in 2020 under Covid-19 pressure. The eurozone will record a global downturn with a 9.1% drop in GDP. World Bank experts say this is the first time since 1870 (one hundred and fifty years ago) that global per capita income has fallen so sharply [3]. In April 2019, these experts estimated the number of the absolute poor resulting from the economic consequences of Covid-19 disease at 16 million. The global economy could see a relative leap in 2021, given the multibillion-dollar bill set by the world's advanced nations to combat the Covid-19 recession. Generally, GDP growth could increase to 4.2%. Developing countries will enjoy a growth rate of 4.6 percent, and in China the same index can return to pre-crisis levels of about 7%. It goes without saying that the global economy's exit from the Covid-19 crisis depends on a number of factors, the future of which is still in a state of ambiguity. In fact, the future of this crisis depends on: whether or not the disease is controlled in the areas that are currently affected, return or non-return of the virus to areas that have been successful so far; Success in global vaccination in the shortest possible time and the level of international cooperation, both in the field of health and in the field of economics. In the following, the effects of Covid-19 on Iran's economic spheres will be comprehensively studied and compared with Turkey.
In turkey Many sectors of industry tourism, international commerce, manufacturing, services, etc. have been heavily influenced by the Covid-19 outbreak. Unlike other economic sectors, food industry has been appearently remaind impervious to the pandemic. The data collected from the stocks of cereals and other agricultural products showed that the demand for these products has had an upward trend during the pandemic. Some economic sectors experienced relatively more damage from the pandemic; insurance and banking, machinery and sports, and metal products are examples of this adverse effect. The Covid-19 outbreak seems to have had the smallest effect on food-beverage and real estate industry. This data shows that different economic sectors have been influenced by the pandemic in various ways. Despite the fact that Turkey is one of the latest Covid-19 infected countries, almost seventy-thousand people have been infected as of April 15th, 2020, making Turkey one of the highest rating countries in terms of confirmed Covid-19 cases (World Health Organization, WHO). Studies show that different industries are effected by the pandemic at different levels. Since the global economies are intertwined together in close relations, the Turkish economony is not solely influenced by the number of confirmed cases inside its borders, but it is also affected by the global pandemic especially that in the contries with whom Turkey has economic relations.
The number of Covid-19 cases within Turkish borders seem to have had more impact on the national economy compared to the number of cases in Europe. The Turkish stock market is also under the influence of Covid-19 cases in the world. Unexpectedly, the number of Covid-19 cases in the world has a positive effect on the Turkish market, but the magnitude is very limited (0.009).
BIST Industrials, BIST Services and BIST Financial are the most negatively affected indexes in the Turkish stock market [4]. Industrial and service sectors are the economic sectors that follow the financial sector in terms of the negative influence they have experienced. The Covid-19 outbreak has had a significantly positive impact only on Leasing and Factoring sector. Other economic sectors have been also positively affected by the outbreak; information technology and wood nand printing sectors are such industries. The significance of this effect is rather small however. Generally, the Turkish stock market indices are influenced by the number of global Covid-19 cases though this impact is relatively small.
In Iran the spread of Covid-19 has also had and will have a great impact on the domestic economy. On the supply side, the economy is facing declining pressure. With the disruption of international trade and even domestic transportation, the value chain of a wide range of products is disrupted and the production capacity of units is reduced due to lack of access to inputs. The economic effects of the virus on businesses and economic activities in the country can be clearly seen. One of the main issues of any country's economy is employment and unemployment, so that the increase in employment and the decrease in unemployment as one of the developmental traits. Unemployment rate is one of the indicators that is used to assess the economic conditions of the country. The study of employment in the major sectors of economic activity shows that the services sector with 49.7% has the highest share of employment. In the next steps, the industry sector accounts for 31.8% and agriculture for 18.6%.
2.1 The Impact on the Energy Sector
Covid-19 and its global epidemic have also affected the upstream and downstream sectors of the oil and gas industry. In this regard, the leading industrial and major consumer countries of the downstream oil and gas industries have closed and shut down and enacted strict laws for quarantine, Thus, the decline in demand for downstream materials in the oil and gas industry led to a decline in worldwide oil demand. Meanwhile, the price war between Saudi Arabia and Russia doubled the negative consequences of the Covid-19 outbreak on the oil market, dropping oil prices to around 25$ a barrel. The sudden fall in oil prices, however, had a very negative impact on the market of petrochemical products, because the prices of most petrochemical products are affected by oil prices in a certain pattern. In other words, if the price of oil decreases, the price of the Iran's petrochemical products will also decrease. Fig 1, shows the trend of changes in oil prices of Texas Intermediate with two petrochemical products, methanol and propylene.
Figure 1. The changes in the prices oil, methanol and propylene in the last thirty years.
As a result of falling oil prices due to the outbreak of the virus, the Iranian government's little hope of success through crude oil sales will be dashed. Because at present, oil is not exported significantly by Iran, and its price reduction could have a significant impact on the Iranian economy [5]. However, the prevalence of the Covid-19 and the fall in oil prices have also affected the market for the sale of the Iran's petroleum products. The most significant impact can be seen in the export of gasoline. Government revenues from gasoline exports can be examined in two ways: export volume and the price of gasoline exported. On the other hand, due to the decrease in public traffic, the average daily consumption of gasoline in the first 15 days of April, 2020 has reached 44 million liters, and compared to the same period last year, the amount of gasoline consumption has decreased by 50 million liters per day.
Although the outbreak of the Covid-19 will add to the Iran's gasoline export capacity, it should be noted that the price of gasoline has reached its lowest level in 20 years. Turkey is growing in importance in the energy markets, as it is a growing consumer. In addition to being a regional energy transit core, with its scarce energy reserves and its growing economic development, Turkey supplies almost all of its domestic oil and gas demand through imports.
Given that Turkey is located in a strategic region at the intersection of oil-rich countries around the Caspian Sea and oil-rich countries in the Persian Gulf with European demand centers as the world's second largest natural gas market, if strategic policies are implemented correctly.
According to the U.S Energy Information Administration and as presented in Fig 2 the total proven oil reserves of Turkey as of January 1, 2016 are estimated at 312 million barrels [6], mainly located in the southeast of the country. As demonstrated in Fig 3, Turkey's oil production peaked at 85,000 barrels per day in 1991.
Figure 2. The proven oil reservs of Turkey form 1980 till 2016 [7].
Figure 3. Turkey oil consumption and production (barrels per day) from 1980 till 2016 [7].
In addition to crude oil imports, Turkey is a pure importer of petroleum products, importing more than 860,000 barrels per day of petroleum products [6]. The 65% of these imports are related to diesel fuel and the rest to jet fuel and liquefied petroleum gas (LPG).
Turkey is one of the busiest chokepoints in the world, through which 2.9 million barrels of oil flowed daily in 2013 [8]. This rate has been affected by the Covid-19 epidemic from 2019 to the present and the periodic lockdowns applied in different countries.
2.2 Impact on the Field of Tourism
The tourism industry is a complex set of various services, many of which originate in the growth and development of the national economy (infrastructure and superstructure). The complexity of this industry creates a variety of employment opportunities in different sectors and can directly affect the production and trade of other services (such as transportation, hotel management). According to figures released by the World Tourism Organization (UNWTO), international tourism in 2019 with 1.5 billion trips compared to 2018 increased by 4% and the global tourism industry for the tenth consecutive year grew positively. If the attention to the tourism industry increases and this industry develops, many different parts of IRAN will face growth and prosperity, including the growth of housing, agriculture, transportation, and direct and indirect job creation.
The outbreak of Covid 19 in Iran has so far caused great damage to businesses in the field of tourism, handicrafts and cultural heritage. The total damage caused by Covid-19 in the field of tourism and handicrafts is estimated at 118 thousand and 298 billion rials. The highest estimated damage is related to Khorasan Razavi with 184,550 billion rials and the lowest estimated damage belongs to Khuzestan province with 242 billion rials. The outbreak of Covid-19 in Iran has also had and will have a great impact on the domestic economy. Therefore, it is necessary to put business protection policies on the agenda. With the government facing financial difficulties and, in addition to declining revenues and falling prices for oil and petroleum products, rising health care costs from the Covid-19, resources for protectionist policies are severely limited. It is therefore very important to adopt optimal protection policies, because tourism businesses have suffered a lot of damage across the IRAN, and the statistics show a high number of damages in tourism facilities, handicrafts.
Thousands of tourist guides[1] have been laid off in Iran following the Covid-19. But other factors against the Iran have had a significant impact on reducing the number of tourists entering the country. Considering all the negative thoughts and movements of Iranophobia that are caused by some countries among the people of other countries, Iran has created confidence in most countries that it is a safe and cheap country for tourists with different tastes, especially in health tourism. Despite its mineral springs and treatment, skilled doctors, cheap treatment, Iran has a high attraction for health tourists. Iran is a country that has a long history and due to this antiquity has many historical places. Also, due to the existence of holy thresholds in the country, it has provided a good opportunity in the field of religious tourism for these tourists. Due to the outbreak of the Covid-19 since February 2017, tourism facilities have been gradually shut down and their staff has been adjusted. As a result, all people affiliated with tourism businesses, including tour guides and service centers in the tourism sector, have been laid off. Therefore, due to the continuation of this trend in 2020 and the severity of this disease and the need for all tourism businesses, including facilities, institutions, ecotourism, tourism activists and guides, handicrafts and cultural heritage to comply with the notification instructions, all these centers have either been closed or they are half closed. In this regard, severe losses have been inflicted on these businesses. Therefore, according to the damages sent by the General Departments of Cultural Heritage of the provinces of the country, the damages are very high and irreparable.
The World Bank's report on the effects of the Covid-19 on countries' GDP and trade shows a sharp decline in people's incomes and a slowdown in GDP growth. According to the World Bank, the Covid-19 can affect the economies of countries and consequently the world in several ways, including: declining employment, increasing international transaction costs, drastic reductions in travel, and declining demand for services that require close and direct communication With each other. The World Travel and Tourism Council also announced a 12 to 14 percent reduction in world travel during the 2020 quarter and a forecast of 50 million job losses in the global industry (of which 30 million are in Asia). The travel and tourism industry in Iran is not immune to these harms and following the outbreak of the Covid-19 in the country, according to statistics announced by the Ministry of Cultural Heritage, Tourism and Handicrafts, 54% of trips decreased compared to the same period and 80,000 people directly They are active in the tourism industry and become unemployed if they do not have support and planning. It should be noted that what can really and sustainably revitalize tourism in the country is the "existence of tourism demand." This demand for Iran is more domestic demand than foreign and is expected to continue due to the continuing disease of this sector. In this regard, and considering the importance of travel and tourism in the world economy and in order to control the devastating consequences of the outbreak of this disease, countries have provided support packages and incentives to prevent the collapse of the tourism sector. Governments support the industry in three areas: supporting workers' livelihoods, financial support, and injecting liquidity. According to the WTTC, the travel and tourism sector after the "Information and Communication" and "Financial Services", the third largest economy in the world in terms of Economic growth has been in 2019. Travel and tourism with tourism-related industries accounted for a total of about 10.3% of GDP and 10.4% of total world employment in 2019, and also the direct share of travel and tourism from world GDP 3.2% and its direct share of employment It has been 3.8% of total world employment.
On average, unskilled workers go unemployed by 5.5% as a result of the reduction of tourism. This varies between 0 to 15
Outbreaks of Covid-19 affect most economies around the world. Different countries have shown different policies and smart planning in the face of this crisis, while some countries have suffered less and others have suffered deeper economic damage, and its effects will remain on the various aspects of the economy for years to come. In this article, we have examined the impact of this epidemic on several economic aspects in Iran and Turkey, and the reason for this comparison is the neighborhood of these two countries and their almost similar population. In general, revenue can be divided into oil and non-oil. Because Iran has more oil resources than Turkey, it has suffered more in this regard. There may be an ongoing oil price war that is having significant effects and consequences on the world economy. With the outbreak of the Covid-19, Iran's neighboring countries, such as Turkey, have restricted Iran's exports to their country due to a sense of danger. As a result of the creation of foreign exchange resources through the non-oil export channel, problems have been encountered. Before the prevalence of the Covid-19, the Iranian economy was predicted in 2020, positive non-oil growth), albeit small, but with the prevalence of this disease, the state of stagnation and instability in the Iranian economy emerged, reducing the demand for exporting Iran's products. Influenced by foreign trade. In the domestic sector, the total demand is also due to the decrease in household income and also due to the decrease in some goods and services that are more prone to the spread of the virus (such as carriage, transportation, transportation). On the other hand, the supply of the whole economy has also been affected by the supply shock due to the disruption in the network of supply of raw materials and the limitation of the activity of some trade unions. Turkey has experienced different levels of crisis in different sectors of the economy, with more damage in some areas and less damage in others, such as the food and grain industries. Iran and Turkey in addition to economic damage inside the country, due to having close economic relations with each other affect each other's economy. In Turkey, for example, due to the high consumption of oil and the lack of oil reserves in his country, it is highly dependent on oil imports from Iran, and this has led to economic impact between the two countries. In the field of tourism industry and as official data present that Turkey has been able to take valuable managments to reduce the destructive effects of Covid-19 by applying an efficient and intelligent activities such as public vaccination and free vaccination of tourists which permits to return the conditions before the global pandemic.
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