With the Greece 2020 tourism season looming just ahead, Greece faces several serious challenges that could end up stifling industry growth. The latest refugee situation coupled with COVID-19 fears could slam on the brakes of Greece’s recovering economy.
A report this week by Alpha Bank assesses the tourism sector’s prospective performance and risks and reveals Greece’s strong brand name and seasonal tourist flows as resilience factors. The majority of tourist arrivals (85 percent) to Greece, are recorded in the May-October period. Analysts expect this seasonal pattern as well as the strengthening of the US dollar against the euro to mitigate the effects of both Covid-19 and the refugee flows. They also add that Greece’s high summer temperatures are expected to mitigate the further spread of the coronavirus.
The bad news comes in the form of this Reuters report based on the European Union’s independent fiscal institutions network. This data factors in the possibility the Greek economy’s growth rate could slow to 2.21% or 1.88% this year, affected by overall eurozone growth slowdown. In other words, Alpha Bank’s figures do not take into account the wider effect COVID-19 will have. The think tank had this to say on the subject:
“The spread of the SARS-COV-2 (coronavirus) is certain to cause a downward revision of world growth forecasts in 2020. Its spread in Europe will slow eurozone GDP growth.”
In recent days Turkey’s President Recep Erdogan has weaponized the refugee situation to hit back at the EU and to impact the Syria incursion by Turkish forces. As a result, the president of the European Commission has pledged millions of euros and a fresh deployment of border guards to manage a new wave of migration.
The flare-up on the border follows tension between the EU and Turkey. The crisis is already putting a damper on bookings to come parts of Greece. On the island of Lesbos, residents are rioting against police over planned migrant camps. The islands off the coasts of Turkey are a powderkeg ready to explode at any moment. Yesterday, Frontex announced an extraordinary meeting today in Frontex headquarters in Warsaw. The management promised to deploy a rapid border intervention requested by Greece.
The situation at our border is not only Greece’s issue to manage.— European Commission 🇪🇺 (@EU_Commission) March 3, 2020
It is the responsibility of Europe as a whole.
And we will manage it in an orderly way, with unity, solidarity and determination. pic.twitter.com/hQkQiKm3zR
In addition to COVID-19 and refugee crisis factors, 2019 was not a stellar year for Greek tourism because German travelers sought out alternative destinations last year. In 2018 German travelers flocked to Greece in record numbers. Last year saw an 8.1 percent decline in tourists from Germany.
The coupling of Euro area growth rate issues like ongoing trade conflicts, geopolitical tensions, increasing refugee flows, and the Covid-19 after-effect will certainly negatively affect the country’s bottom line this year. Already, the International Air Transport Association (IATA) – reduced passenger traffic leading to potential revenue losses in the aviation sector of 29.3 billion dollars in 2020.
Greece’s fiscal council suggests that the government needs to use part of its cash buffer, in consultation with official lenders, “so that any deviation from the primary budget surplus of 3.5% of GDP does not lead to restrictive fiscal measures”. If the Greece 2020 touristic season is to break even with recent years, officials are going to have to prop up local businesses dependent on these touristic flows. Already, margins for hotels and retailers are cut to the bone. A disastrous season would certainly put many out of business if measures are not taken.
On a final positive note, Greece has seven confirmed cases of coronavirus so far, but no deaths. This is a relatively low toll for Europe, where the virus has spread widely and caused more than 50 deaths and over 2,000 cases in the worst affected country, Italy.