Greek tourism surge heals economy in red

ATHENS - Reuters

Tourists take pictures of statues at the museum of the ancient agora (market) in Athens September 13, 2013. REUTERS/John Kolesidis

Strong spending by foreign visitors widened Greece’s current account surplus in July, confirming expectations that a bumper tourism season will help ease the debt-laden country’s recession this year amid the countrywide strikes.

With domestic demand, investment and industrial output suffering amid an austerity-driven slump, spending by foreign visitors is becoming the only growth driver for the economy, which is seen shrinking less than an initially projected 4.2 percent this year.

Tourism receipts, the country’s biggest foreign-currency earner, rose 12.3 percent year-on-year to 2.36 billion euros($3.15 billion) in July, central bank data showed on Wednesday, showing strength for a second consecutive month and boosting the outlook for a balanced current account down the road.

Current account surplus increases

As a result, the current account balance, a key measure of economic competitiveness, showed a surplus of 2.727 billion euros ($3.64 billion) from 0.508 billion euros in the same month last year.

Greece’s current account deficit had swollen to 15 percent of gross domestic product in 2008, highlighting its lack of competitiveness. The International Monetary Fund expects it to shrink to 0.8 percent of GDP this year, mainly as a result of austerity-fuelled, six-year recession which slashed imports.

The July reading was also helped by an inflow of 1.5 billion euros from the European Central Bank, the first tranche of profits on Greek government bonds from its so-called Securities Markets Program (SMP).
The latest inflows brought total tourism revenue in the first seven months of the year to 5.68 billion euros, a 15.4 percent rise compared with the same period last year, when fears of a Greek eurozone exit kept tourists away.

The local tourism industry is forecasting a 10 percent rise in tourism receipts for the full year to 11 billion euros, expecting more than 17 million visitors. Hoteliers, restaurant owners and tourism businesses have slashed prices and upgraded services to weather the crisis and lure more visitors.