Greece’s Largest Industry Suddenly Takes a Terrible Hit

They’re all coming out of the woodwork, urging international audiences to come visit Greece. Today it was Greek Tourism Confederation President Andreas Andreadis who appeared on Bloomberg TV to explain in English that for tourists, “things are normal,” their “daily reality has not been affected,” they can access their accounts, use their credit cards, etc. They “don’t have issues at the moment,” he said, but suggested, “Obviously, come with some cash as well.”

Alternate Tourism Minister Elena Kountoura chimed in: “The tourists that are currently in Greece, as well as those that are going to come, will not be at the least affected by the latest developments and can continue to enjoy their vacations in Greece without the slightest problem.”

We’ve heard similar assurances on NPR and elsewhere. And we believe it. If we had time, we’d to go to Greece immediately. It’s a beautiful country, with great food and wine, hospitable people, enormous cultural wealth, millions of things to do, and warm summers, unlike San Francisco.

And now there might be an additional incentive for us: fewer tourists than during the normal summer chaos.

Tourism is crucial. It’s Greece’s largest industry. It’s the only major industry still growing. It’s vibrant, hardy, and resourceful. It has successfully dodged the economic miasma of the last few years. No government has been able to kill it, unlike some other industries.

It accounted for 17.3% of GDP in 2014 and for 9.4% of total employment, according to the World Travel and Tourism Council. The industry also supports numerous jobs outside the industry; direct and indirect jobs combined contributed 19.4% to total employment. “This is expected to rise by 3.9% in 2015,” the report added.

Plus, visitor exports amounted to €12.2 billion last year, or about 25% of total exports! Much of the economic reform package was focused on getting Greece to be more competitive with the rest of the world so that it could export itself out of trouble. Visitor exports would grow by 2.1% in 2015, the report said. Travel & Tourism investment in 2014 reached €2.8 billion, or 13.7% of total investment. “It should rise by 3.6% in 2015,” the report said. More investment is what Greece needs the most….

Alas, all these growth assumptions for 2015 now look sadly obviated by events. Because tourism is suddenly collapsing after the government’s decision to hold a referendum, shut banks, and default on its payment to the IMF, the Ekathimerini reported:

  • Hotel bookings plunged by 50,000 a day, according to Andreas Andreadis, the head of the Association of Hellenic Tourism Enterprises (SETE). Last-minute bookings make up 20% of the annual tourism traffic, and they’re getting hammered.
  • Already existing bookings at Athens hotels are seeing “a growing wave of cancellations.”
  • Ferry ticket bookings to visit the myriad of islands in the gorgeous Aegean Sea had been going strong, posting a year-over-year increase of 10% until June 25. But when Prime Minister Alexis Tsipras announced the referendum, they plunged 60%.
  • Hotel bookings by Greeks – who’re now struggling with basics and are in no mood to go anywhere else in Greece – “have dropped to almost zero.”
  • And Greeks traveling by plane are getting cold feet. Ekathimerini cited data released today by travel websites Travelplanet 24 and Airtickets. Ticket booking by Greeks for the July-September period suddenly plunged by up to 50%. And ticket cancellations soared from the average rate of 1.05% to 7.02%, and on Monday hit 22%.

“So the blow is expected to be severe for Greek tourism, with knock-on effects on employment if those bookings are lost for good,” the paper laments.

So make it up with manufacturing?

“Production fell at the fastest rate for two years, dragged lower by a sharp and accelerated drop in new orders,” according to Markit’s PMI report, released today. The index for June dropped to 46.9 (below 50 = contraction), the second-lowest in two years, just a smidgen less bad than in April, and in contraction mode for the tenth months in a row.

And the all-important new export orders, which are supposed to pull Greece out of its depression, “fell to the greatest extent since February 2013.” June was the eighth month of declines in a row.

Whatever the outcome of the referendum, the bailout negotiations, the default, and the rest of this nightmare, it’s going to be tough for the Greek economy, and the businesses – those that still remain.

If the government of Prime Minister Tsipras, with all its cool appearances, wild gyrations, presumed game theories, ceaseless finger-pointing, and constant shooting-from-the-hip has accomplished anything major so far, after five months of tyring, it’s the mangling of the already mangled Greek economy, and particularly of tourism at the beginning of the utterly vital July-August tourism season. Whatever the government’s intentions might have been, and however good they might have been, they’re now paving the road to economic heck.

But in Greece, even the “smart money” has been left to twist in the wind. Read…  Panicked Hedge Funds Now Praying for a Miracle in Greece

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  20 comments for “Greece’s Largest Industry Suddenly Takes a Terrible Hit

  1. What the crisis cannot undo, peak oil will.

    “No peak oil,” you cry. Okay, believe what you want, but the crisis in Greece is the consequence of oil peaking to date. Our bottomless guzzling could make use of a hundred-plus million barrels per day … if we could get them. Instead, the world must do with a measly ninety million or so, much of that ‘liquids’ such as pentane … that cannot be refined into motor fuel.

    Shortages => higher prices (starting in 2000) => greater demand for credit (because car use cannot pay for anything) => breaking credit costs => end of the bid for petroleum! Last year at this time the price of Brent began its famous collapse. Blame is fixed on a frakker/Saudi price war but the customers (Greeks among them) … are broke. They cannot borrow any more.

    Airplanes guzzle and so do giant ships. They’re gone … so are the cars. We (Greeks) refuse to conserve voluntarily … so conservation is crammed down our (Greeks’) throats by hook or by crook. The alternative to Greece Method is Syrian Method/Yemeni Method … Haiti Method. Tourist flights to Aleppo and Port au Prince are much reduced as well …

  2. Vespa P200E says:

    Tspiras is such a typical coward socialist buffoon. So he was “elected” to lead but absolves himself and other elected politicians from making hard choice but pushing it as popular referendum on its people who may not quite comprehend what’s the issues are and more imporatantly consequance of making silly statement akin to middle finger of sort. Talk about biting the hand taht feed you…

    And talk about the timing – in the midst of EU vacation season and perhaps severely choke/maim the golden goose… Who knows what the consequances of this silly Euro academic exercise will be othe than losing its status as safe reserve currency forced into devaluation which heck might be just what Mario and his handlers at Government Sacks wants anyway.

  3. NotSoSure says:

    Oh come on Wolf, the weather has been gorgeous this couple of days ;) When the weather is like this, I absolutely love San Francisco.

  4. MC says:

    A couple or so years ago, Greece was pitching herself very aggressively on the industrial export market.
    They bragged about low labor costs being the main reason to do business with them. And that’s where the problem laid.

    Labor costs are pretty much the only thing the Greek industry has going for it and in a globalized world where you have to compete with China, Malaysia and Vietnam it doesn’t amount to much.
    To make matters worse, Greece has always come dead last inside the EU when it comes to CAPEX and productivity: neither Tsipras nor his predecessors did anything to change that. Taxation and legislation have literally chocked the Greek industry like they are chocking the Italian and French ones.

    Now, and here I am going to tell an open secret, one of the reasons the Greek industry has been able to muddle through is they offer good deals if you pay in cash and under the table. But at the end of the day why bother when a German firm will offer the same product at the same price and with a fully legal, out in the open transaction? Why bother when the myriad of Italian and Austrian small manufacturers which relocated or opened subsidiaries in Romania and Bulgaria can even beat that price?
    Bluntly put, this is a short term survival tactic, not anything that can guarantee long term growth. To do that you need taxation that doesn’t push people into dealing under the table, legislation which doesn’t punish CAPEX and labor unions which behave like grown people instead of simply furthering their own leaders’ political careers and declaring useless strikes.

    Greece, very much like Italy, has absolutely no intention of dealing with the problems which, coupled with the EMU, have literally murdered her industrial base. Marine Le Pen, for all her other issues, has put forward a plan to allow the French industry (outside of Wards of the State such as SNECMA, PSA and Areva) to regain at least part of the competitiveness they lost when the EMU came into being. It’s not perfect, but she’s the first Southern European politician to acknowledge the problem and at least propose a solution which doesn’t involve exploiting workers (high unemployment = desperate people = old fashioned exploitation) and relying on continuous State subsidies.

    Now, regarding tourism. I’ve been to Greece on vacation a single time in my life. I didn’t like it, but at least I was in excellent female company. My impressions are very limited, but I felt like the country as a whole relied more on a simple combination of old world charm and beaches (to be honest it wasn’t that cheap) than providing a fully integrated experience to the tourist like France does.
    Museums looked shabby and poorly arranged, archeological sites were often run down and tourists weren’t as welcome as they are in, say, Spain (and here I mean small towns in Aragona, not tourist capitals such as Malaga). Mind this was before all Hell broke loose in 2008.
    When it come to highlighting the local cultural heritage India, for all her many issues, does a far better job.
    Again, the country would need serious ideas, not plans made up of empty rhetorics and aimed at squeezing every peso out of people. Tourists should be willing to pay for the privilege, not being robbed blind at every turn.

  5. Bob Miller says:

    I wouldn’t go to Greece at the moment if they offered me an all-inclusive free vacation. The last thing I want is to stay in a hotel, ride in a taxi, eat in a restaurant or stroll down a street where everyone is putting on a happy face for my benefit. But then I’ve worked for this evil empire (US) all my adult life going to these places where we were causing contention in order to serve the wants of men like Lloyd Blankfein, Jamie Dimon and Ben Bernanke. Nevertheless, don’t let me stop you, but if you and your family make the evening news, don’t blame the Greeks.

    • Petunia says:

      The three musketeers are probably strip mining Greece of everything they can.

      If the Greeks were smart they would convert to the Yuan, for a while, and give the west the middle finger. The Yuan will allow them to buy anything they want and it is not controlled by the incompetent Greek govts of the past and future. This would give them some breathing room financially and politically for a while.

  6. mark says:

    “they’re now paving the road to economic heck.”

    with more than a little help from Goldman Rats ….

    they’re gonna help Hillary too Yes They Can

  7. Julian the Apostate says:

    Central planners never see these “unintended” consequences coming even though a blind man could see it with a cane. As I’m becoming more cynical over time I’m not buying the incompetence angle any more, I believe all this mangling is intentional and purposeful. Like the dog in the parable who lets go of his bone to steal the bone in his own reflection, he loses it all.

  8. pogohere says:

    No mention of the Greek shipping industry (?) Here’s a take on that, FWIW:

    This article deals with by far the largest industry in Greece, the Merchant Marine. This is characterized by three things: Greece is home to the largest and most powerful commercial fleet in the world. No other fleet in the world is even comparable well positioned for the next 10 to 15 years. Although commercial shipping a huge growth industry is global, and Greece is the world leader, she came into the Greek current account and national accounts from the 1960s until 1998, practically no. Since then she has a shadowy existence in the statistics, although they had the biggest boom since the First World War until 2008. This article will explain these anomalies. He also explained what would be the consequence of Grexit for this by far the most important export branch of Greece.

    Many superficial observers see wrongly goods exports as a quality in foreign trade in. Germany is then automatically export champion. Because Greece is represented there weak, this was the image of a backward, inefficient economy, which dominates today. In numerous reports and international organizations is described as Greece and disqualified latent. In German talk shows Greece is casual or sarcastically referred to as scrap. It had and Greece has a very modern export-oriented service sector. Merchant shipping is a key support industry for the global production of goods and the international exchange of goods. 80-85% of world trade is handled physically on maritime transport.

    Without this industry there is no specialization, no comparative advantages , no efficiency gains and no economies of scale in the global production of goods. Without them there would be no modern energy and food supply, no steel production, construction, chemicals, etc. Sea transport is an integral part of a division of labor and highly efficient global production of goods. By the ocean-going ship transportation Greece participates directly in this global production of goods without having a concentrated and specialized manufacturing industry in the national context. The country can thus also align effectively to those emerging markets and sectors which have the highest growth rates.

    The sea is a growth industry with average growth rates well above that of the global gross domestic product and a fortiori on the carriage of goods or industrial production. It is an industry with extremely high added value and productivity that comes close to the financial industry. With this, however, it shares the characteristic that it is highly cyclical in nature – and that the cycles are brutal, almost violent. (more)

    • Wolf Richter says:

      You’re way off. Shipping is Greece’s SECOND largest industry, behind tourism. It contributes about 7% to GDP, directly and indirectly, vs tourism, which contributes 17% to GDP, directly and indirectly.

      Yes, Greek ship owners control a good part of the bulk tonnage, but those Greek-flagged ships don’t stop by Greece on their way from Australia to China or from Brazil to China, or from Saudi Arabia to the US, or from the US to Russia….

      Owning a ship doesn’t mean it’s creating economic activity at home. These ships are built in Korea or China, funded perhaps by a German bank, maintained elsewhere, and ply routes that don’t go anywhere near Greece. At the end of their lives, they’re salvaged in India or Pakistan.

      A typical Greek-flagged ship is doing business around the world, except in Greece. It might never show up in Greece.

      Greek ports essentially collapsed. At least one of them got bailed out by the Chinese, and it’s doing pretty well. The rest are in deep trouble.

      Here is some authoritative info from a Greek bank about Greek shipping, in English. It’s pretty dire:

      • d says:

        Further there is currently a shipping glut on china outbound. A huge increasing capacity oversupply projected to last some time as COSCO and MERSK are racing each other to the bottom on rates and the top on capacity oversupply. both building as many “Malacca Max” vessels as possible.

        Neither are making money, and the greeks are way down the list compared to those two.

        Tankers are that cheap to rent on daily rates, that china is renting several of them, using them as a strategic oil store, moored north east of Singapore.

        One reason for the Nicaragua Canal most miss, it is being built to take vessels much in excess of “Malacca max” which the Panama even after the upgrade will not be able to handle.

        • Wolf Richter says:


          Also, Greek shipping companies largely missed out on the container businesses where Mersk et al dominate. They’re big into bulk and oil, but an also-ran in containers. So the crash of the bulk rates (BDI) really was hard on them.

  9. Lakshminarayanan says:

    “Whatever the outcome of the referendum, the bailout negotiations, the default, and the rest of this nightmare, it’s going to be tough for the Greek economy, and the businesses – those that still remain.

    If the government of Prime Minister Tsipras, with all its cool appearances, wild gyrations, presumed game theories, ceaseless finger-pointing, and constant shooting-from-the-hip has accomplished anything major so far, after five months of tyring, it’s the mangling of the already mangled Greek economy,…”

    I agree. But what I cannot understand everyone going for Tsipras. If at all finger has to be pointed it has to be at the various stooges of Brussels who were at the helm earlier and who had contracted the debt. IMHO, at least Tsipras and Yanis are taking the bull by its horns and calling what is happening for the farce it is.

    The debt is unmanageable today due to the stooges taking it on earlier. By the same logic it will be more unmanageable tomorrow if contracted today. If Greeks cannot see thru what is happening they deserve what they have got and what they will get if they vote YES. Greeks should vote NO and stay in the Euro and call the nannycrats bluff.

    If at all Tsipras can be faulted it is for not learning enough about propaganda from Goebbels.

    • d says:

      “Greeks should vote NO and stay in the Euro and call the nannycrats bluff.”

      If they do that, the ECB and the Troika, will financially (Eur) cut them off, and let them wither on the vine, until they beg to leave the EU and so the EZ

      • Lakshminarayanan says:


        My point is not that it is a good choice but it is the only choice. Greece is now between a rock and a hard place. They actually should have quit when the going was good (Drachi- ‘Whatever it takes’) but they did not and now the debt has ballooned. Why balloon it further. Let the air out and do whatever it takes to get out of the hole you have dug yourself into. It is always better to get of a hole that is 4ft deep instead of digging 1 ft further.

        What I am saying is another bailout will further add to the debt and then instead of $300 billion Greece has to confront it will be $350 or $400 billion. Do you think the creditors are going to let them default at any time? Not to mention the serfdom that comes with the higher debt, more cruel because the creditors.

        So you have to bite the bullet at some point of time. Why is later a better time is what I cannot understand. That is what Yanis is saying. No more extend and pretend. Bite the bloody bullet and get out of the yokel of unbearable debt. It is gonna be painful but then this is what happens when you feed without thought, you are bound to get stomach ache.

        Yes makes sense only if Greece is sure to get a haircut (50% is a good start) on its debt. But if this were the case there would be no referendum at all as this is what Alexis and Yanis have been banging the table about for the last 6 months.

        The referendum is actually all about haircut on the debt. YES – NO HAIRCUT. NO – HAIRCUT, AS i SAID 50% IS A GOOD START, IMHO. ALEXIS AND YANIS MAY EVEN AGREE FOR 30%.

        The EUs are trying to scare Greeks into voting Yes. I can only hope they are not silly enough to fall for it.

        • d says:

          “So you have to bite the bullet at some point of time. Why is later a better time is what I cannot understand. That is what Yanis is saying. No more extend and pretend. Bite the bloody bullet and get out of the yokel of unbearable debt. It is gonna be painful but then this is what happens when you feed without thought, you are bound to get stomach ache.”

          So you are saying the EU has to bite the bullet, write off its debt, give greece more money (Debt) and greece does not have to reform.


          What the Troika has been saying for nearly a year now is, “complete the reforms, and we will talk about some restructuring.” The last greek administration threw an election, to avoid completing these last reforms, they had been dragging their tails on, since mid 2014.

          The Marxist answer has been, NO REFORM, more free money for greece NOW, for the last 6 months. Like a bully in a kindergarten sand pit.

          greece should have bitten the bullet, and completed the reforms, in March. Elected on untenable, and unkeepable promises, the Marxist refused

          Which is why we are here.

          You seem to be of the, NO REFORM, more free money for greece, clan.

          Your clan does not understand, the free money for greece game, is over.

          Even the IMF, which admits some restructuring of debt is needed, also admits more reform is needed. Like the reforms greece agreed to complete, and hasn’t.

          In the current circumstance, without completed reforms. How is anybody going to be able to sell. Bailout 3, 70 B Eur + free money for greece ,with no completed reforms, now or ever, to eastern and north eastern Europe, let alone Germany. Wont happen.

          The EZ and the EU are rules based systems.

          greec will play by the rules, and reform, or go.

          greece has broken to many promises, so will receive nothing but debt rollover until it reforms, or leaves, particularly with the abrasive Marxists in controll of it, simple.

          Greece can not be ejected from the EU, legally.

          The EZ will simply collapse the banks in greece by recalling all their loans on the 21 St july. Cut of the supply of Euros and wait for greece to beg to leave. With its debt burden intact. Unless by a miracle greece pays the ECB 3.5 B Eur on the 20Th July

          You seem to be another who does not understand.

          For the Troika, this cat fight is not about money. So the Troika, and the Marxists, are fighting each other, over different thing’s. Just like Vietnam each side fighting with a different objective, so it went on, for over 30 years, with different protagonists.

          greece can not win, either fight. simple.

  10. Duane says:

    So wouldn’t a cheaper currency help their biggest industry? Going back to the drachma might not be so bad, besides it beats losing your sovereignty. Greece should rip of the bandage and get out of the Euro.

  11. Lakshminarayanan says:


    I am in neither camp. All I am saying is both are at fault and Troika more so — Why did Troika force more debt (in 2012, when Euro appeared to be falling apart and French and German Banks would have been left holding the bag- Which is why they did not pull the pulg then) on Greece knowing fully well it cannot be paid?

    I never said Greece does not have to reform. Oh it sure does. But you cannot have reform while they are being impoverished by debt. It is not humanly possible.

    Just think like this… You have lent some one 100000USD, you find he is not able to repay and instead asks for 500000USD. Would you give him the money. So why did Troika give the money knowing that Greece may not do a thing and will not be able to repay. It is because they could not let Euro experiment fail at that time and it would have as the Banks would have gone bankrupt.

    There is so much political mud in this that is beyond me.

    If Alexis or Yanis were half as smart as Hitler and Goebbels they would have by now used propaganda after forming the government to make it clear that if Greece defaults Troika is getting their just desserts as they lent money to a country knowing fully well there was no hope of getting it back — BTW this is also called fraud. No one will question it because the guys who are supposed to be regulating are themselves doing it.

    • d says:

      “I never said Greece does not have to reform. Oh it sure does. But you cannot have reform while they are being impoverished by debt. It is not humanly possible. ”


      2 times now, greece have say, we will reform. sign paper, take money, not reform.

      Then comes the Marxists, Troika must cancel debt NOW, give more money to greece NOW, no reform, roll back existing reforms.

      The governments of the east and north, will now not give more money, until greece actually reforms, first, if the Marxists are gone..

      The troika can talk them into rolling the existing debts (No more cash to greece but status quo maintained) maybe 1 or 2 more times, giving some months for greece to reform, but only if there is real reform in greece. Is there the possibility of some form of debt relief.

      Marxists have turned a bad situation, into a disaster, for ordinary greeks.

      Wait a few more hours then we will see what can possibly be done, hopefully yes wins, or disaster, become catastrophe.

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