Greek tourism fall threatens 10-year gains

With tourism plummeting, COVID-19 might send Greece back to the dark days of the euro zone crisis.
With tourism plummeting, COVID-19 might send Greece back to the dark days of the euro zone crisis.

About now, Charlie Chahine should be welcoming his first international guests of the season to his Suites of the Gods resort on Santorini, Greece's most-popular holiday island.

A few of his staff of 30 would be serving poolside cocktails as guests took in the island's famous sunset, his hotel becoming a little busier every day as summer approached, bringing two million visitors to Santorini's cliff-edged shores.

"The situation now is at zero, nothing is moving. How will tourists get here without airplanes? In a submarine?" said Chahine. Around him, the whitewashed buildings of Fira, the island's main settlement, are a ghost town.

With tourism paralysed by the coronavirus pandemic, Chahine has cut his staff to just eight and fears the season will be much worse than even 2015, when Greece was forced to close its banks and impose capital controls to avoid bankruptcy.

"This time last year, we had 12 cruises and more than 15 ships stopping over in Santorini. Now, we see a ship every three days," he said, looking out across the empty Aegean Sea.

The pandemic threatens not only to rob Santorini of income and jobs; it risks sending Greece, whose tourism industry makes up a fifth of the economy, sliding back toward the dark days of the euro zone crisis a decade ago.

If tourism is a wipeout this year, some economists say, the economic and financial gains born of years of austerity and three international bailouts might unravel.

"This time, the expected shock will be much bigger than serious jolts in the past," said Nikos Magginas, chief economist at Greece's National Bank.

The economy is forecast by the European Union to shrink by 9.7 per cent this year, almost a percentage point more than in 2011, its worst year of the debt crisis, with unemployment projected to rebound to around 20 per cent, back to where it was two years ago.

Greece's sovereign debt is expected to balloon out to almost 200 per cent of economic output, more than undoing the gains earned through the painful public spending cuts which the euro zone and IMF demanded as the price for bailouts.

Although Greece has one of Europe's best records at handling the pandemic, with 2678 coronavirus cases and 148 deaths, its tourism industry relies overwhelmingly on overseas visitors, especially from Europe, the United States and China.

Views are mixed on just how hard the pandemic will hit the economy. With the European Central Bank ensuring that Greece can continue to borrow at affordable interest rates, the government predicts an economic contraction of between 4.7 per cent and 8.9 per cent.

Of the 700,000 people who worked in the tourism sector last year, many might never get their jobs back.

Australian Associated Press