Santorini, a 76-square-kilometer volcanic island, has become an economic powerhouse for Greece, contributing approximately 2.5% to the country’s GDP. However, its intensifying seismic activity now poses a serious risk to Greece’s economy, as ongoing uncertainty threatens the island’s ability to sustain its booming tourism industry,
The Economic Power of Santorini
Santorini’s influence on Greece’s economy is disproportionately large given its size and population of just 15,000 residents. According to economic analysts at MEGA, the island contributes an estimated €5.9 billion to the national economy annually. In the third quarter of 2024 alone, Santorini generated €267.5 million in accommodation revenue and €108.2 million from catering services—leading the Cyclades in tourism earnings. The island is home to 1,216 accommodation businesses and 712 catering establishments, solidifying its role as a tourism juggernaut.
According to the National Bank of Greece, Santorini accounted for 4% of the country’s total tourism revenue in 2023, amounting to €820 million. However, discrepancies in reported figures highlight a major challenge: the widespread use of cash transactions, which often go unrecorded, significantly inflating real tourism-related earnings. Analysts argue that Santorini’s contribution extends beyond tourism, feeding into real estate, retail, and local investments, making it an indispensable part of the Greek economy.
Tourism Dependency and Economic Vulnerabilities
Greece’s reliance on Santorini and Mykonos has intensified over the years, with one-third of the country’s total tourism income depending on these two islands alone. The government’s post-crisis economic policies prioritized tourism over industrial investment, as tourism provided quick returns to service debt obligations. However, this approach has left Greece exposed to external risks—as seen now with Santorini’s seismic activity.
Overtourism has already placed immense strain on Santorini, making it one of the most congested islands in Greece. Unlike other tourist hotspots, Santorini’s limited beaches and infrastructure struggle to accommodate the millions of visitors it receives annually. The situation is further exacerbated by the influx of cruise ship tourists, flooding the island’s narrow streets and overwhelming local services.
Future Risks: Beyond Earthquakes
While Santorini’s seismic activity currently dominates concerns, other risks loom over Greece’s tourism-dependent economy.
- Geopolitical tensions (e.g., conflicts with Turkey) could deter visitors.
- Natural disasters such as wildfires or floods could disrupt travel plans.
- Changes in travel advisories from major markets like the U.S. could lead to sudden drops in visitor numbers.
- Tour operators shifting destinations could redirect tourists away from Greece to competing markets.
At the same time, the Greek tourism industry remains imbalanced, with 50% of revenues concentrated in the Cyclades while other regions, including Lesbos, Chios, and Samos, struggle due to the impact of migration flows. The inability to diversify economic sectors beyond tourism has made Greece highly vulnerable to external shocks.
A Call for Economic Diversification
Greece’s reliance on tourism, particularly in Santorini and Mykonos, is not sustainable in the long run. While the current earthquake threat has raised alarms, it is a reminder that the country must expand its economic base. Developing alternative industries, reducing VAT, and investing in manufacturing and technology are long-term solutions that could reduce dependence on unpredictable tourism revenue.
For now, Greece cannot afford to cut back on tourism, as it remains a primary source of income for the government. However, if Santorini’s seismic activity worsens or another external shock occurs, Greece will once again find itself in a vulnerable position, with limited options for economic resilience.
Originally written by Theophrastos Andreopoulos and published on Pronews.gr – Translated from Greek and edited by Kyriaki Balkoudi
