Greece Tourism Report Q2 2015
BMI View: We believe that over the short term, Greece's tourism industry will suffer from the politicaluncertainty, as potential risks of domestic unrest deter visitors. Moreover, the continued economicpressures and high unemployment will constrain domestic tourism and outbound tourist departuresconsiderably. That said, should Greece exit the EU we would anticipate a surge in tourism numbers as theprobable return to the drachma would make holidays in Greece attractively cheap. Finally, towards the endof 2015 and in the first part of 2016, we expect that the passing on of lower fuel prices to consumers byairlines will boost the wider tourism flows across Europe, and Greece could be a key beneficiary of thistrend.
The finance ministers failed to come to an agreement in their previous meeting on February 11, and bothsides did not even make a joint statement following the talks. Greek Prime Minister Alexis Tsiprasmaintains Greece wants to agree a 'bridging loan' to be put in place until August, while a new deal is agreedto replace the current troika bailout. The eurozone lenders say Greece must agree an extension of its currentbailout deal, which expires on February 28. We do not think either side will come to an agreement in talkswithin this deadline. Instead, the best that can probably be hoped for is that both sides agree to a further setof meetings over the coming weeks. Both sides are taking an increasingly hard-line stance in the talks toboost their bargaining position, implying that progress towards any agreements will be sluggish at best.
Nevertheless, we still think some form of compromise agreement will be reached, giving Greece and thetroika more time for discussions over renegotiating the country's current bailout. Over the long term, webelieve Greece will manage to extract some concessions from the troika lenders, with debt maturities onGreece's debts being extended as part of a renegotiated bailout package. This will do just enough to avert apotential Greek default and exit from the eurozone in 2015.
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