By John Daly
Back in the worst days of the recession, Irish people took solace in the knowledge that ‘there’s always someone worse off’. That ‘someone’ was Greece.
At the height of its financial meltdown, in 2011, the country was crippled with enormous national debt, endured weekly food riots, and suffered mass emigration. No escape seemed likely. The image of pensioners rummaging around in rubbish bins remains one of the more stark portraits of the era.
What a difference a decade makes. Last month, Angel Gurria, secretary general of the OECD, declared to Greek prime minister, Alexis Tsipras: “Congratulations, prime minister, you have brought Greece back from the brink. Greece’s reform efforts are finally paying off.”
Indeed, the Greek economy is growing again, at rates of 2% in 2018 and 2.3% predicted for 2019. That’s faster than the eurozone average. Employment has also been growing, by up to 7% since 2014, with exports the main driver, increasing their contribution to the economy from 24% of GDP in 2008 to 34% in 2017.
The country’s primary balance went from a large deficit, in 2015, to a surplus of more than 3.5% of GDP in 2016, and 4% of GDP in 2017, exceeding the European Stability Mechanism targets.
But, as Mr Gurria added: “We know that this effort has had a significant social and political cost.
“The long crisis has taken a heavy toll on the economy, but, most importantly, on the Greek people.”
Significantly, the markets have noticed this progress, with the Greek government bond spread having fallen from 12%, in April 2015 to below 4% two weeks ago. Greek bond yields are not far from what Ireland’s and Portugal’s were when they exited their own ESM programmes.
Similarly, the Athens stock market has almost doubled in two years, and banks are cleaning up balance sheets and packaging bad loan books out to investors, a process with which few Irish people will be unfamiliar.
In February, ratings agency, Fitch, raised Greece’s credit rating from B-minus to B, with a positive outlook. Greece’s public debt ratio has stabilised to 175% of GDP, still among the highest in the world. Where eight years of recession have shrunk the economy by 25%, unemployment is down from 28%, in 2014, to just over 21%.
While Greece lacks much of the multinational presence that helped Ireland climb out of reversionary darkness, it does have a tourism industry, with significant room for expansion. As the EU’s sixth-most-visited destination in 2016, the country could push this already healthy sector to new highs, through further investment.
“While having almost 30m tourists from May to September is a huge number, it could reach 40m in a nine-month period, if the tourism season were extended,” said the president of the Greek Tourism Confederation, Yiannis Retsos.
“The bet, now, is to enrich the tourism product and have added value that will attract not necessarily more, but richer tourists, so we can have more receipts.”
Tourism is Greece’s biggest industry, with arrivals rising 10% in 2017, from the previous year, to 27.2m and generating revenue of just over €14.5bn, according to Bank of Greece data.
Tourism accounted for 18.6% of the country’s GDP in 2016, a figure expected to rise to 23.8% by 2027.
“In order to increase arrivals to 36m and revenues to €20bn, by 2021, Greece needs investments worth €6bn a year,” said Mr Retsos.
In the first quarter of the year, there was a 20% increase in international arrivals, with Crete, for example, recording a rise of 800%, with more than 50,000 tourists visiting the island.
“The growth that we will see in the travel-and-tourism sector in Greece will be phenomenal,” said the chairman of the World Travel & Tourism Council, Gerald Lawless.
“Tourism can be the economic driver for the country. Greece is on its way to becoming a year-round tourism destination, as it has much more to offer than just beaches and sun.”