Updated: Mar 22, 2021
As April approaches, it is clear that the earlier optimism expressed by Greek and Cypriot tourism officials may be misplaced. Although no one doubts the necessity of opening to tourist inflows in a country where tourism accounts for at least 20% of GDP, the practical modalities of doing so in the middle of the Third Wave remain in doubt.
Cyprus has officially stated that Russian tourists will be welcome in Cyprus from April 1st, and British tourists from May 1st. The problems with this are obvious:
The third wave of coronavirus cases has started in Cyprus and lockdown measures are still in effect. No policy has been announced for tourists, but there is a backlash among local residents wondering what freedoms tourists will be allowed.
Cyprus had already claimed that Russians could travel to Cyprus from March 1st, and was forced to delay the opening. Russia has not yet been placed in the countries allowed to enter Cyprus. Russia is currently recording approximately 9,000 new cases per day, which is well above an epidemiologically safe level to allow entry.
Although Cyprus has stated that British tourists will be able to arrive on May 1st, the British government has signalled that tourists will not be able to leave England before May 17th.
Cyprus implemented nearly 100,000 vaccines as of 8 March. We are clearly in a race against time to see what may happen with the summer tourist season. While there has been a rise in bookings for the summer, the virulence of the third wave and the discovery of new strains continues.
Our forecast is that we will be lucky to have 40% of 2019 arrivals this year, or about 1.6 million tourists. But until we can open safely, and until there is parity between tourists and residents, that will be difficult to achieve.
The third wave in Greece appears even more virulent than the second wave, but is occurring in relatively looser conditions of lockdown. The Greek government is now resorting to a regional lockdown strategy.
In January 2021, the Greek government had announced the idea of a travel passport for patients who have been vaccinated. That proposal has been taken up and supported by the European Commission. However, it remains to be seen if the passport will be ready in time.
France has just announced a third lockdown, targeting Paris and other regions. Only 5.6 million people had received the first dose of the vaccine as of 21 March.
The UK is seeing a gradual tapering off of the third wave. This has been helped by the highly rapid roll-out of the vaccine. By 20 March, 27.6 million people had received the first dose of the vaccine. Recent vaccinations have been running above 500,000 people per day. This is excellent progress. The government has advised its citizens to keep travel to a minimum. Foreign holidays will not be allowed to start by 17 May 2021.
Germany is seeing the start of a potential third wave. The country is now considering extending the lockdown until past Easter, possibly into May. According to Google News, 10.47 mln vaccines have been administered until 19 march.
As we forecast on 4 November 2020 and on 12 December 2020, the persistence of the coronavirus has resulted in vastly longer than predicted lockdowns. At the same time, the slowness in vaccine procurement and distribution means that we are in a race against time to “save” the tourist season.
As of 22 March 2021, we believe it will be extremely difficult to talk about a major tourist opening in Greece or Cyprus. We will be lucky to get 40% of 2019 incoming tourism in these two countries.
At the same time, the economic damage already caused is severe:
In Greece, public debt in 2020 reached € 374 billion while GDP fell to € 165 billion. In one year, the country added € 43 billion to central government debt. Greece’s debt : GDP is now 227%, and although many official sources are calling this sustainable, we do not see how it can be considered so.
In Cyprus, public debt in 2020 reached € 25.2 billion while GDP fell to € 20.8 bln (preliminary figure). Debt : GDP is 121% and can be sustainable assuming the government takes fiscal measures from 2022 and onwards.
In the United States, public debt reached $ 28 billion (Federal, State & Local) while GDP fell to $ 21.6 billion. That’s a debt : GDP ratio of 130%, and this does not count semi-governmental organisations.
In the US, the Federal Reserve’s balance sheet has now reached over $ 8 trillion, while the European Central Bank’s assets have now reached € 7 trillion.
As we’ve said before: 2021 is only going to show worsening numbers.
Together with a wider political changeover, it is very apparent that we are rapidly heading into a new debt crisis.
As before: We recommend taking all measures consistent with safeguarding public health. At the same time, we cannot help seeing the dark clouds of a new political crisis and a new debt crisis gathering.
Navigator Consulting: 12 December 2021
Navigator Consulting: 3 November 2020
Navigator Consulting. 14 September 2020
Navigator Consulting. 3 September 2020
Navigator Consulting. 3 August 2020
Navigator Consulting. 13 July 2020
Navigator Consulting. 8 May 2020
Navigator Consulting. 1 April 2020
Navigator Consulting. 18 March 2020