2024-09-23 06:14:31
Tourist arrivals are up in July, by more than 4%. However, revenues from tourism are down, with the result that in the first critical month of the tourist season, due to the volume of activity, a worsening of the surplus in the balance of services is recorded.
The alarm bell had sounded already in the first half of the year, as the statistics of the Bank of Greece showed a significant decrease in the per capita collection per visitor.
In July, this was now also reflected as a decrease in total receipts from tourism. And it is possible that in the 7th month the total revenues will remain higher compared to the January – July period of 2023, however there is a well-founded concern that a similar picture will be recorded in the August and September data as well.
The causes of the decrease in tourism revenues, recorded in the month of July, in the “heart” of summer, are attributed by market factors to punctuality, which forces tourists to reduce their length of stay, while the spread of short-term stays also has a negative effect. Airbnb-style rentals, which reduce the cost of accommodation, as well as all-inclusive services.
The “bet” is now whether the new record of receipts in tourism will finally be recorded and what will be the impact on the GDP of the widened compared to last year’s current account deficit. It is recalled that the economic staff of the government has relied enough on the performance of tourism to stimulate the growth of the economy and increase the GDP by 2.5%, which is the new target (from 2.9% that was initially).
In the event that the receipts remain at the same levels as last year, there will be pressure in combination with the irregularities recorded in the exports of merchandise.
What caused the decrease?
At the end of the year, Greek tourism will make a “fund” for the tourist year of 2024, which so far has been characterized by the increase in international air arrivals compared to last year, but also by the simultaneous decrease in the number of overnight stays in hotel accommodation, with what this means for their profitability.
The people of the tourism industry, of the country’s heavy industry, speaking to “N” on the occasion of the figures of the Central Bank of Greece, which show a decrease in tourism revenues in July, emphasize that it is premature to make any assessment of the actual recording of arrivals and revenues this year in GDP of the Greek economy, however, they estimate that the big bet is still the increase in tourist numbers compared to 2019.
The optimistic and even celebratory start of this year’s tourism year was not reflected in increased arrivals compared to 2019, as it was emphasized. In fact, the “gas” that has been pressed by the arrivals of foreign visitors to Greek destinations during this period is hoped to continue until the beginning of November, in order to equalize, as they say, the relaxed start of the tourist season. Now the size of arrivals, they note, is virtual for hotels.
Hospitality professionals only count overnight stays, which in the end are the ones that have an impact on the financial result of businesses. As they can see from the course so far, Europeans are now dividing their vacations, choosing resorts in their place of residence and in the second year escapes outside their homeland. Consequently, the vacation time in the tourist resorts of the other countries is reduced.
It is characteristic that the two weeks of escape have now become 7 days for the majority of Europeans. For their part, hoteliers, given the fact of the reduction of overnight stays in Greek hotels, are focusing on the short-term rental market, which costs less than hotel accommodation, which they estimate has absorbed the large portion of undocumented arrivals.
Furthermore, all inclusive services reduce the expenditure of foreign visitors. Finally, professionals in the hospitality industry speak of a difficult equation in the field of their sustainability and sound the alarm, as the hotel entrepreneur cannot withstand the financial burdens that are added to the businesses of the sector every year.
A significant problem for the external balance and for the economy in general is the faster increase in imports compared to exports, despite the fact that fuel prices no longer create the same problem they did in 2021 amid the energy crisis.
The decrease in exports and the increase in imports is problematic
And yet, the deficit in the trade balance is getting bigger – month after month – as a result of which there is still a source of concern about what the growth rate will be in the end this year. The 2.5% target has already been moved away and this is expected to be certified by the revision of the forecasts even by the Ministry of Finance itself.
In absolute numbers, July’s current account deficit reached €8.573 billion, up from €7.279 billion in 2023. That’s a difference of around €1.3 billion, which corresponds to around 0.6% of GDP. This difference “hits” directly on the GDP and incorporates the increased (up to July) revenues from tourism. The latter amounted to 10.952 billion euros in 7 months, from 10.375 billion euros last year.
Although August and September revenues are lower this year than last year, this difference will disappear and hopes for a new record will be limited. On the trade balance front, the problem is now clearly located in imports excluding fuel. They reached 37.099 billion euros, up from 35.224 billion euros last year, even surpassing the performance of 2021. Fuel imports have not posed a problem this year, moving at the same levels as last year (around 12.2 billion euros).
Exports of goods excluding fuel, on the other hand, showed an improvement in July, but at the 7-month level they remain lower compared to the January-July 2023 period (20.883 billion euros from 21.454 billion euros last year). In July 2024, the current account surplus decreased by EUR 600.4 million compared to the corresponding month of 2023 and amounted to EUR 246.2 million.
The deficit in the balance of goods widened, due to the larger increase in imports relative to the increase in exports. At current prices, exports of goods increased by 8.3% (5.9% at constant prices), while imports of goods increased by 8.4% (10.6% at constant prices). In particular, at current prices exports of non-fuel goods increased by 7.5% (4.8% at constant prices), while imports of non-fuel goods increased by 13.6% (13.2% at constant prices).
The services balance surplus narrowed due to the deterioration of primarily the travel services balance and secondarily the transport balance, while the other services balance improved. Compared to July 2023, non-resident traveler arrivals increased by 4.1%, while related receipts decreased by 4.2%.
The balance of the 7 month
In the January-July 2024 period, the current account deficit increased by 1.3 billion euros compared to the corresponding period in 2023 and amounted to 8.6 billion euros. The goods balance deficit increased due to the simultaneous decrease in exports and increase in imports. At current prices, exports of goods decreased by 1.3% (4.3% at constant prices) and imports of goods increased by 4.1% (4.8% at constant prices). The surplus in the services balance widened, due primarily to the improvement in the balance of travel services and secondarily in the balances of transport and other services. Compared to January-July 2023, non-resident traveler arrivals increased by 11.2% and related receipts by 5.6%