Greece’s tourism receipts have dropped by nearly a quarter in the past two years, central bank data showed last week, with strikes and violent protests dragging down a key sector already hit by the global crisis. Greece counts on its sun-drenched beaches and historic monuments for nearly a fifth of its economy and a recovery in tourism is crucial as the country struggles with a debt crisis and its worst recession in 36 years. Spending by foreign tourists fell to €2.78 bln in the six months to June, down 11.9 per cent year-on-year and 23.3 per cent over two years, data showed. Revenues were hit particularly hard in June following the death of three bank employees during a protest against government austerity measures in May, at a time when almost daily strikes were leaving tourists stranded at ports and airports.
“June was the worst month of this summer season. We paid for the May protests, the deaths and the bad publicity that followed this violence,” said George Drakopoulos, general manager of the Association of Greek Tourism Enterprises.
Greece suffers from competition with cheaper neighbouring destinations such as Turkey and Croatia. It has increased value-added tax by four percentage points to 23 per cent this year as part of an austerity drive aimed at pulling the country out of a debt crisis that has shaken financial markets worldwide.
“Tourists were definitely scared by the demonstrations and violence in Athens and didn’t book,” said Andreas Schuerle at DekaBank. “Greece is also a relatively expensive country for tourism, and tax increases made it even more so.”
Industry leaders had initially hoped the sector would fare better this year than in 2009 thanks to a weaker euro, but social unrest dashed those hopes and they now see a repeat of last year’s 10 per cent slide in tourism revenue.
“I’ve never experienced this before. There was no business in June,” said jewellery shop owner Alexandra Verykokaki, 50, who has worked in central Athens for more than 30 years.
Drakopoulos said there were signs things could improve over the rest of the summer as the drop in tourist arrivals had narrowed in July to 1.3 per cent, from a 5.5-6 per cent drop in May. August arrivals should be at last year’s level or slightly higher, he said.
“This does not mean that revenues will cross to positive territory ... but the drop will be contained to -10 per cent.”
Greece’s economy is forecast to shrink four per cent this year with austerity measures, imposed as Athens seeks to cuts its budget deficit to 8.1 per cent of GDP this year from 13.6 per cent last year, adding pressure.
The tourism industry wants the government to promote Greece abroad, saying it can bring in much-needed cash, but the advertising budget has been cut as part of the austerity drive.
“Unfortunately, it’s going to take time for Greece to regain the image of a tranquil tourist destination,” said Diego Iscaro, at IHS Global Insight.
Central Bank data also showed that Greeks, hit by austerity, spent less money abroad this year than in previous years. Spending fell 10.5 per cent year-on-year in the first half and has dropped 20.4 per cent over the past two years.
Shipping, another key industry, is doing better, with transport receipts rising 14.8 per cent in the first six months, thanks to a recovery in global trade.
Data on Wednesday showed Greece’s current account deficit shrank 16 per cent year-on-year in June to €1.94 bln, helped by shipping, an increase in exports and a slight drop in imports.
30.08.2010
