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Britain's recession hurts Greek tourism

Source: Reuters - Wed 19th Aug 2009

Greek tourism revenues dropped sharply in the first half of the year, straining further the country's economy which is facing the risk of recession, central bank data showed on Tuesday.

Spending by non-residents visiting Greece shrank 14.7 percent from last year in the January to June period to 3.1 billion euros (2.6 billion pounds), the Bank of Greece said. In June, the first month of the peak summer holiday season, receipts were down 10.4 percent to 1.39 billion euros.

A slump in tourism may exacerbate the downturn in economic activity and tip the economy into its first recession since 1993. The tourism industry employs nearly one in five Greeks and is one of the country's biggest foreign currency earners along with shipping.

"June figures were in line with our expectations" Andreas Andreadis, head of the Hellenic Hotel Federation, told Reuters. "I expect the tourism industry to post a 15 percent revenue decline for the full year" he said.

Recession in Germany and the UK, the main countries of origin of the 15 million people visiting Greece each year, has hurt the industry this year.

Tourist arrivals in popular resorts such as Kefalonia and Chios dropped by up to 26 percent in the first seven months of the year, a tourism research body said. A bad start to the tourism season was partly to blame for a record jump in unemployment in May to 8.5 percent, economists said.

Despite the downturn, the 10.4 percent drop in June could be a sign that tourism may not suffer as much as was initially feared, said Dimitris Maroulis, an economist at Alpha Bank.

"This is far better than the 24 percent decline seen in May" he said. Airport arrival figures for July saw just under 2 million visitors entering the country, down 5.9 percent from last year. 

Still, tourist spending in July may be far lower than arrivals figures suggest, as hotels attracted travellers with steep discounts, Andreadis estimated. "June was a relatively good month, but I expect July to be worse" he said.

The IMF, OECD and European Commission see the Greek economy, which makes up 2.5 percent of the euro zone, sliding into recession this year, posting negative growth between 0.9 and 1.7 percent. Greek GDP suffered its first annual contraction in 16 years in the second quarter.

Greece narrowly escaped falling officially into recession in the second quarter, posting a 0.3 percent growth rate compared to the first quarter, according to flash estimates. The technical definition of recession is two consecutive quarters of negative growth.

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