Tourism saves Southeast Europe’s economies from stagnation

Tourism saves Southeast Europe’s economies from stagnation
/ bne IntelliNews
By Clare Nuttall in Pristina October 4, 2023

Growth has decelerated across Emerging Europe this year, but the slowdown has been less marked along Southeast Europe’s Adriatic coast. The reason increasingly clear as data on tourist arrivals comes in from Albania, Croatia and Montenegro is the very strong summer 2023 tourist season. 

While GDP growth did not match the steep rebound growth immediately post-pandemic, the tourism-dependent economies in the region have avoided the marked slowdowns seen in Central Europe, as tourism compensated from weaker exports. 

“In the Western Balkans, the effect of weakening trade with Eurozone partners at the beginning of 2023 was partly offset by the strong performance of the tourism sector in the region’s service-based economies,” the European Bank for Reconstruction and Development (EBRD) said in its latest Regional Economic Prospects report in September. 

The development bank forecasts GDP in the region will grow by 2% this year, rising to 3.4% in 2024. That compares to projected growth this year of just 0.5% in Central Europe and the Baltic states. 

Croatia's foreign tourist revenue hit €3.85bn in 1H23, up 21.4% year on year, according to the Croatian National Bank (HNB). In 2Q23 alone, revenue was €3.18bn, an 18.4% y/y increase.

Minister of Tourism and Sport Nikolina Brnjac commented: "After the record year 2022 in terms of foreign tourist revenue, in 2023 we are registering even better results. Croatia has made big progress in quality and become recognised as a desirable tourist destination also outside of the summer months.”

In the first eight months of the year, Croatia reported an 8% rise in arrivals and a 2% y/y uptick in overnight stays, the Croatian Tourist Board (HTZ) reported on September 5.

Data from the eVistor system showed a total of 16.2mn arrivals and 88.5mn overnight stays, mirroring the pre-pandemic levels of 2019. German tourists contributed the most overnight stays, with 18.8mn.

In August alone, Croatia welcomed 4.6mn arrivals and recorded 31.5mn overnight stays, with arrivals up by 1% and stays down by 2% y/y.

“Despite the present circumstances, including the impact of global inflation and the ongoing conflict in Ukraine, Croatia has achieved an excellent result, which will be further strengthened in the post-summer season,” HTZ director Kristjan Stanicic said.

Rating agency Standard & Poor’s listed “dynamic tourism” among the drivers for Croatia’s growth, when upgrading the country’s long-term sovereign credit rating outlook to positive. 

Albania reported 1.9mn foreign tourist arrivals in August, a 22.5% y/y increase, according to statistics office Instat. That continued the strong performance of the tourism sector already seen in July, the first of the peak summer months. 

Overall in the first eight months of the year, 6.7mn foreign citizens arrived in Albania for holidays, visits to relatives or other personal reasons, up by 26.6% y/y. 

Passenger traffic at Tirana airport more than doubled in the first half of 2023, helped by the decision of lowcoster Ryanair to start operating flights to and from Albania, data from the Airports Council International (ACI) showed. 

Tirana International Airport, the main airport in Albania, recorded a 105.1% y/y increase in passenger traffic in 2023. Albania performed even better in June, at the beginning of the summer tourist season. 

Ryanair’s decision followed a hike in the number of tourists visiting Albania, which experienced a dramatic post-pandemic recovery in the tourism sector, as well as a capacity expansion at Tirana International Airport to handle up to 10mn passengers per year. 

The increase in tourist arrivals was despite the sharp rise in the lek against the euro and other major currencies, which has made the country somewhat less affordable. 

In Montenegro, the number of tourists stood at 240,754 in August, up by 6% y/y, statistics office data showed. 

As in Albania and Croatia, tourism is a key industry for the Montenegrin economy, contributing around a quarter to its GDP. In 2020, it was severely hit by the coronacrisis, but it has recovered rapidly. Expectations for this year are the number of visitors to reach a new record, improving on that from 2019.

Overall, the statistics office reported that foreign tourist arrivals totalled 221,416 in the eighth month of the year. Tourists’ overnight stays stood at 1.085mn, up from 1.043mn a year ago. Foreign tourist overnights amounted to 999,203.

In 2022, tourist arrivals increased by 30.5% y/y to 2.18mn.