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The Drachma, being a convertible currency, will be as hard as the Euro.

"Hard currency," in this context, means "foreign currency."

You buy your imports in foreign currency, and since you can't print it yourself, you have to trade for it. And at the moment, they're running a trade deficit.

Hence, "with what hard currency?"

The recession makes most tourists much more price sensitive which gives Greece with a radically devalued currency a huge advantage in capturing market share.

But in a shrinking market, as long as the recession drags on.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 31st, 2011 at 03:56:39 AM EST
[ Parent ]
Global tourism has been declining by 2-6% in the last couple of years, but Greek Tourism has been growing rapidly (even before devaluation) and now represents 15% of GDP and 16.5% of the workforce.

Tourism is a very dynamic market which can respond very quickly to changes in fashion or price competitiveness. Given the scale of the Greek devaluation I have envisaged, I wouldn't be surprised if Greek tourism grew by 50% (restricted primarily by transport capacity constraints) on a once off basis even in a declining global market.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 31st, 2011 at 04:49:00 AM EST
[ Parent ]
before there was ibiza, there was greece as beacon magnet for low budget travellers.

europe needs more options for young people and small-pensioned retirees to go visit. if greece repicks up that role then a lot of american and european backpackers too will go fill their bars and beaches, who now go to asia.

zero snob value, but hey... it'll pay for a few wind turbines and solar panels.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Jun 1st, 2011 at 01:22:11 PM EST
[ Parent ]

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