Greece’s economy faces threats from climate change after debt crisis

  • Greece hit by the financial crisis from 2010 to 2018
  • Most indebted country in the euro zone with almost double the GDP
  • Tourism dependent economy vulnerable to climate change
  • Impact of coastal erosion, rising sea levels could harm growth

NEA IRAKLEIA, Greece, November 4 (Reuters) – Walking along the coast of the village of Nea Irakleia where he would go swimming in his youth, George Perperis shows where there was once a beach, now submerged by the ‘sea water.

“Here there was a 20-meter-wide beach that has completely disappeared,” says Perperis, 59. “Families gathered here to swim and fishermen set their nets there.”

Accelerating coastal erosion from climate change poses an existential threat to places like Nea Irakleia in western Halkidiki, a three-pronged peninsula of lush forests and golden sands in northern Greece that lives tourism.

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The region was one of the hardest hit by the financial crisis that ravaged Greece from 2010 to 2018, slashing the economy by a quarter and pushing many people into poverty.

Now, the impact of rising temperatures, extreme weather conditions and accelerating coastal erosion on key sectors such as tourism and agriculture could once again put the finances of the most indebted country at risk. from Europe.

“The crisis years were really tough, a lot of stores closed and tourism slowed down. Then there was COVID,” said Perperis, a retired mechanic and local community leader.

“But climate change could be worse. What will a tourist do here if there is no more beach?”

Experts say coastal erosion in Halkidiki, which attracts around 10% of Greece’s 30 million annual visitors, has intensified in recent years.

An observatory installed two years ago in Thessaloniki, monitors the phenomenon using satellite photos, marine floats and algorithms. Eighteen areas that authorities refer to as “red spots” have been identified in the region, showing intense coastal vulnerability.

“Unfortunately, we can see areas where we will have serious problems on the coast,” said Costas Gioutikas, vice-prefect for the environment in Central Macedonia. “We are seeing beaches literally disappearing.”


Before the pandemic, tourism accounted for around a fifth of the Greek economy and a similar proportion of jobs, generating revenues of € 18 billion in 2019.

Economists warn that the challenges posed by climate change – abnormal weather conditions, tides flooding beaches, scorching summers and declining rainfall – could all be a major drag on Greece’s growth potential.

The most recent research available from the Central Bank of Greece in 2009 showed that the cost of inaction on climate change to the Greek economy will exceed 700 billion euros by 2100, representing a significant 2% decline in national production each year. He said adaptation measures could reduce the cost by 30% and mitigation policies by another 30%. An updated report will be ready in a few months.

With public debt estimated at 196.6% of GDP, Greece is the most indebted economy in the euro area, so it is vital that the country can support growth to maintain repayments.

“It is important to realize that Greece should be at the forefront of countries which initiate mitigation policies,” said Stavros Zenios, professor at the University of Cyprus and non-resident researcher at the Bruegel think tank. . “For countries like Greece, the expected GDP growth rate could drop to a third by the end of the century from what it is today.”

Yannis Stournaras, governor of the Central Bank of Greece, told Reuters the country’s finances are manageable.

Interest payments on its mountain of debt – most of it refinanced at very low rates of around 1.5% – represent less than 3% of annual national production. Growth rates would have to exceed borrowing costs to keep a cover on that debt, Stournaras said.

But, as world leaders gather in Glasgow for the COP26 global climate conference, he said he feared enough was not being done to tackle the most damaging effects of global warming.

“It’s not just a theory or an academic issue, it’s with us now and I’m afraid the world is not doing enough,” Stournaras said. “The horizon is so far away that no one thinks we should act now to solve what will mostly appear 50 years from now.”


This summer, Greece has already had a glimpse of what a warmer future could bring, with thousands of acres of forest burned for days in wildfires that ravaged the outskirts of Athens and others. regions. Read more

Working on a scenario of an increase of 2.5 degrees Celsius by 2046-2065, compared to 1971-2000, a team from the University of Athens predicts that heatwave days – defined as at least 3 days at above 40 ° C – will increase 15-20 days per year. by 2050, while precipitation will decrease by 10 to 30%.

Scientists warn that the sea level could rise 20 to 50 cm (8 to 20 inches) during the same period. This could make Greece’s 16,000 km (9,940 miles) coastline vulnerable as a third of the population lives up to 2 km from the coast and 90% of the country’s tourist infrastructure is in the areas. coastal.

Increasingly, gusts of extreme weather conditions are also expected.

On the night of July 11, 2019, at least seven people were killed and over 100 injured in a violent short-lived “supercell” storm that hit an area not far from Nea Irakleia.

“Of course, everything is linked to climate disturbances,” said Christos Zerefos, professor at the Academy of Athens and climate specialist. “If nothing is done to stabilize the climate, such phenomena will only continue and increase in the years to come.”

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Written by George Georgiopoulos; Editing by Alex Richardson

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