Global Macro Service > Research Briefings > Eurozone
Mediterranean countries suffered some of the largest GDP losses experienced in the eurozone last year, due in part to the collapse in tourism. In our baseline forecast, we envisage a partial recovery in 2021 as travel restrictions are gradually eased this year, but this outlook is very uncertain. Should tourism experience another lost year, the damage to the Mediterranean countries’ economies would widen the GDP gap with the core eurozone countries.The tourism sector has been one of the worst hit by the coronavirus crisis, with tourist arrivals to Mediterranean countries down 60%-80% y/y in 2020. Activity recovered partially during summer 2020 as some restrictions were eased. Although activity recovered somewhat in summer 2020, the collapse in tourism contributed to massive GDP drops of 8%-11% in Italy, Spain, Portugal, and Greece in 2020. This was well above the eurozone average decline of 6.8%.We anticipate a level of tourism in summer 2021 similar to or higher than that of last year. Tourism will continue to be supported by a stronger than usual domestic share of travellers, as international restrictions will be the last to be removed and people will remain reluctant to travel abroad. But we don’t expect a full recovery of services exports, including tourism, to pre-crisis levels until at least early 2023, behind the recovery in GDP and domestic demand.Further delays in production and distribution of vaccines, as well as the spread of more transmissible virus variants, pose large downside risks to our baseline forecast for the Mediterranean countries. We expect a more gradual recovery if international tourism in 2021 is similar to last year, with a negative impact on GDP. In this downside scenario, economic effects would be very light for Italy, but take -1% off GDP for Spain and Portugal, and -6% for Greece.
To read the full briefing please
If you are not a subscriber, request a free trial of our Global Macro Service by filling out the form below