Alpha Bank: Tourism Key Driver of Greece’s Economic Recovery in 2023

Photo source: Alpha Bank

Tourism played a decisive role in Greece’s post-Covid recovery and is set to support growth in the coming years, found a report released this week by Alpha Bank.

According to the bank’s bulletin titled “The Trends and Characteristics of the Greek Economy in the Past Year and the Challenges for the New Year”, Greece can look forward to steady growth, an increase in investments, record tourist flows and revenues, and fiscal stability.

The report’s findings echo The Economist’s decision to name Greece “Country of the Year” for 2023 for its resilience.

More specifically, Alpha Bank analysts attribute the positive outlook to the country’s steady economic growth compared to the rest of Europe. Indicatively, the Greek economy is set to maintain its growth rate in 2023 and 2024 compared to the Eurozone with GDP forecast at growing by 2.2 percent in 2023 compared to 0.6 percent in the Eurozone and by 2 to 2.9 percent in 2024 compared to 1.2 percent in Eurozone.

In the same year, the tourism industry managed to exceed pre-pandemic 2019 levels in both revenues and arrivals despite inflationary pressures. Indicatively, according to the latest Bank of Greece (BoG) data, tourism revenues in the January-October 2023 period exceeded total travel receipts for 2019 driven by a 17 percent rise in traveler flows. Total travel receipts generated from January to October 2023 came to 19.6 billion euros, up by 14.7 percent over the same period in 2022 and way past the 18.17 billion euros recorded in 2019.

At the same time, investment activity increased by 7.4 percent in the January-September period, accounting for the largest positive contribution to economic growth.

This year, Greece also managed to recover international confidence in its economic outlook 13 years after its credit ratings plunged in the 2010 economic crisis. Last fall, Moody’s upgraded the country’s credit rating from Ba3 to Ba1 with a stable outlook as did Japan’s R&I, Germany’s Scope Ratings Agency,  and Canada’s DBRS Morningstar.

Looking ahead, Alpha Bank analysts cite inflationary pressures, geopolitical instability, the impact of a new reality of natural disasters and the urgent need to prioritize prevention strategies as key challenges.

According to the data, in the first 11 months of the year, inflation stood at 4.2 percent compared to 9.4 percent in the corresponding period in 2022. At the same time, forest fires and floods took a toll in 2023 prompting the government to allocate 600 million euros to natural disaster management in the 2024 budget. Greece will also be receiving 2.2 billion euros in EU resilience funds to for natural disaster welfare and recovery.