Greece: 80% of tourism revenues lost in January-May 2020

Greece: 80% of tourism revenues lost in January-May 2020

About 8 out of 10 euro in tourism revenues were lost in the five months of January-May due to the catastrophic impact of the pandemic.

The pandemic seems to be boosting the economy’s external financing needs, as they soared to EUR 5 billion in five months, up from just EUR 303 million in the same period last year.

EUR 5.6 billion deficit in five months

In January-May 2020, the current account deficit stood at EUR 5.6 billion, up EUR 706 million compared to the same period in 2019, as the deterioration in the services and secondary income balances more than offset the improvement of goods and primary income balances.

The goods deficit narrowed as imports fell faster than exports. Export and import developments largely reflect developments in fuel exports and imports respectively, as mentioned above. Exports of non-fuel goods decreased by 4.1% at current prices (3.6% at constant prices), while the corresponding imports decreased by 11.6% (11.1% at constant prices).

The surplus of the services balance was reduced by half, due to the deterioration of all individual balances and especially the travel balance. Arrivals of non-resident travelers and related revenues decreased by 63.8% and 78.5% respectively. In terms of the transport balance, its surplus was reduced by 20.4%.

Investments

In the period January-May 2020, in the category of direct investments, the liabilities of residents to foreign countries (corresponding to direct investments of non-residents in Greece) increased by EUR 1.2 billion.

In portfolio investments, the increase in residents’ receivables from abroad is mainly due to the increase (by EUR 14.7 billion) in residents’ investments in bonds and bonds abroad. The reduction of their liabilities to foreign countries is mainly due to the reduction (by EUR 7.4 billion) of non-residents’ investments in bonds and interest-bearing bills of the Greek State.

In the category of other investments, the increase in residents’ receivables from abroad (by EUR 2.4 billion) is mainly due to the statistical adjustment associated with the issuance of banknotes. The increase in their liabilities to foreign countries mainly reflects the increase (by EUR 20.3 billion) in non-resident deposits and repos in Greece (including the TARGET account) and the increase (by EUR 7.2 billion) of public and private sector loan liabilities to non-residents. It is pointed out that, in the period January-May 2020, the developments in the categories of portfolio investments and other investments are largely due to securitization of loans of systemic credit institutions, which took place in previous months.

At the end of May 2020, the country’s foreign exchange reserves amounted to EUR 8.7 billion, compared to EUR 6.5 billion at the end of May 2019./ibna