Greece has managed to emerge from the red zone, contrary to the pessimistic expectations that accompanied its severe financial crisis in 2012, followed by painful economic reforms and years of austerity. It owes this mainly to the vital tourism sector, which is experiencing its most prosperous period, to the point of oversupply, which threatens to have negative repercussions on infrastructure, the environment and the cost of living for local residents.
According to government data, Greece attracted more than 32 million tourists in 2023, three times the country’s population, while revenues exceeded $20.5 billion. The total number of tourists is expected to grow to about 40 million in 2024.
As an indication of the economic recovery, per capita GDP, according to Bloomberg data, increased by 7% since Prime Minister Kyriakos Mitsotakis took office in 2019, outpacing major economies in the bloc, including Germany (1%), France (1%), Italy (2%), Spain (-2%), the United Kingdom (1%) and the United States (4%).
Greece has also put behind it the era of the collapse of the labor market, which witnessed a record unemployment rate of 25% at the height of the financial crisis, to fall to 10.8% in the last update in April 2024, while the employment rate, according to government statistics, exceeded the 4.3 million barrier in April of the same year for the first time since September 2009.
Mitsotakis, who won a second four-year term in office, said: May/A“Greece will be a completely different country by 2030,” he said, because “we have managed to achieve a high growth path with fiscal discipline at the same time.”
tourism in a state of saturation
With nearly 25% of GDP (including indirect benefits) and one in four jobs, tourism is the country’s leading industry and the main driver of Greece’s boom, but that status is under threat.
Santorini Island (southeastern Greece) is the pride of Greek tourism and one of the most popular tourist destinations in the Mediterranean. With the intense demand for it, the island is now facing the risks of overtourism, as local authorities’ statistics, as reported by the city’s mayor, Nikos Zorzos, showed that at least one in four tourists who came to Greece visited Santorini in 2023.
The situation is not different in the rest of the Greek islands. Only Paros (southeastern Greece), with a population of 10,000, used to receive about half a million tourists annually, while Mykonos (Gonpa), also with a population of 10,000, attracted more than two million tourists in 2022. The capital, Athens, received more than 7 million tourists in 2023, and this number is expected to increase in 2024, according to experts, by 20%.
Observers link this surge in tourist flows to the decline in the strong performance of the tourism sector in neighboring Turkey. To what extent can this link be correct?
Did Greece benefit from Türkiye’s decline?
According to what was reported by “Turk Press” from the Turkish Minister of Treasury and Finance, Mehmet Simsek, Turkey achieved its best performance ever in the tourism sector in 2023, with revenues of $54.3 billion and the entry of 57.1 million tourists, including more than 4 million Arab tourists, an increase of 11.1% over the previous year.
But this performance remains in doubt in 2024, due to some indications of a possible decline in the sector, which indirectly boosted tourism in neighboring Greece.
The Turkish Travel Agencies Association revealed in the first week of August that the occupancy rate in cheap accommodation in popular holiday areas such as Bodrum, Marmaris, Fethiye and Antalya is only half, despite it being the peak season. Overall, the room occupancy rate in 2024 until August has decreased by 15 to 20 percent on average.
Turkish tourists to Greece
Observers attribute some of the reasons for the aversion to tourism in Turkey to the significant increase in inflation rates, which was reflected in a significant increase in prices and damage to purchasing power, including the Turks themselves, which prompted large numbers of them to flock to neighboring Greece.
Official data from the Greek Ministry of Tourism indicates that more than 316,000 Turks entered Greece between January and April, an increase of nearly 50% over the same period in 2023, making the Turkish market the largest jump in foreign tourism for Greece.
On April 1, 2024, a few months after the historic meeting between Greek Prime Minister Kyriakos Mitsotakis and Turkish President Recep Tayyip Erdogan, the Greek authorities introduced the “fast-track visa” allowing Turkish tourists to obtain visas upon arrival on 10 specific Greek islands.
Despite the decline, Turkey’s tourism industry maintains an optimistic outlook for the future, waiting for high inflation levels to be contained, as the country has diverse and internationally competitive tourist destinations. Turkey also does not suffer from infrastructure and capacity problems, or extreme weather problems compared to neighboring Greece.
From blessing to curse
The Greek government faces a real dilemma between the need to intervene to contain the repercussions of overtourism and its devastating effects on the one hand, and maintaining the pace of recovery and protecting the sector and its millions of job opportunities.
However, in any case, we cannot ignore the suffering of the Greeks due to the high rise in the real estate and rental market in light of the unprecedented influx of tourists, as the mayor of Santorini spoke about, a new reality that makes many tourist areas out of reach for the majority of the local population and the middle class. In addition to that, there is the seasonal suffering from traffic jams and environmental degradation due to the accumulation of waste.
The high population density in tourist areas such as Santorini, with around 1,000 inhabitants per square kilometre, threatens water and electricity supplies. Some island mayors have begun sounding the alarm, especially as the country also faces the worsening effects of global warming.
Greece experienced its warmest winter since 1960 this year, and a heat wave hit the country earlier than usual. According to the meteorological services, the month of June/June and July were the hottest in Greece’s history, with temperatures exceeding 40 degrees on several consecutive days.
Several islands, including Leros, Sifnos and parts of Crete and Kefalonia, have already declared a state of emergency due to water shortages at the height of the tourist season, as years of extremely low rainfall and an abnormally hot winter have taken their toll on reservoirs and groundwater sources.
Last July, the Greek Navy and Defense Ministry sent ships carrying water to the southern Aegean island of Leros to meet local needs.
The capital, Athens, which is one of the hottest capitals in Europe, is the most vulnerable to the consequences of severe climate change due to the decline of green spaces and the great depletion of its resources during the tourist season.
While many European countries have begun to take measures to control overtourism, with the Spanish city of Barcelona taking action against short-term rentals, Athens wants to move forward with more comprehensive measures but has not announced any official plans to curb the dangerous state of chaos in the tourism sector.
