Greece’s hopes of a 2014 exit from its deepest recession in a half-century may hit a stumbling block after Russia banned European Union food imports in retaliation for sanctions stemming from the insurgency in Ukraine.
“The estimated total cost of Russian counter-sanctions for the Greek economy may look tolerable, but the impact could be quite damaging for industries such as tourism and agriculture amid the fragility of a slowly recovering economy,” said Thanos Dokos, director-general of the Hellenic Foundation for European and Foreign Policy (ELIAMEP), a Greek think-tank. “It also raises questions about energy security in the coming autumn and winter.”
Russia is Greece’s biggest trading partner, according to data compiled by Bloomberg. The value of total trade between the two nations reached 9.3 billion euros in 2013, surpassing trade flows between Greece and fellow EU-member Germany.
The recent depreciation of the ruble amid the sanctions and the situation in Ukraine may mean that Greece will see 200,000 fewer Russian tourists this year than originally expected, said Xenophon Petropoulos, director of communications at the Association of Greek Tourism Enterprises, also known as SETE. That could deal a potential 300 million-euro blow to Greece’s biggest industry, based on preliminary estimates.
Tourism will be affected too. “Arrivals from Ukraine will drop by 50% and arrivals from Russia are expected to reach 1.1 million, instead of 1.3 million,” Petropoulos said.
The ruble is the worst performer among 24 currencies of emerging countries tracked by Bloomberg in the last month, with a 5% decline against the dollar.
Tourism contributes more than 16% to Greek gross domestic product, according to SETE data, and Russia has been the fastest growing source market for visitors to Greece. Tourism revenues from Russia increased 42% last year to 1.34 billion euros, according to Bank of Greece data.
While the Russian market is a very important destination for Greek agricultural products, the turnover in absolute numbers is limited and manageable, the Greek Foreign Ministry said Aug. 9. Agricultural products account for 41% of total Greek exports to Russia, and are worth around 200 million euros a year, according to the Panhellenic Exporters Association.
Russia doesn’t figure in the top 15 export destinations for Greek products. Even so, the country absorbs about one quarter of Greek peach production and one half of strawberry output. Exports to Russia fell 26.1% in the first four months of the year to 84.9 million euros, or 1% of total exports, according to the association.
Source: Bloomberg
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