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A10 | Wednesday, September 4, 2013 THEWALL STREET JOURNAL.
WORLD NEWS
COPENHAGEN—Denmark’scentral-bank governor said theadoption of negative interestrates a year ago at the height ofEurope’s debt crisis has kept thekrone steady even amid renewedturbulence on currency markets.
In an interview, NationalbankGovernor Lars Rohde said thecentral bank’s decision to cut itsdeposit rate to below zero hashelped defend the krone’s fixedexchange rate at little cost to thecountry’s banks.
The krone has remained sta-ble within its narrow peg againstthe euro in recent months, whilecurrencies ranging from the Bra-zilian real to the Indian rupeeand the Norwegian krone haveseen sharp moves as investorsready for the U.S. Federal Re-serve to gradually ease its mone-tary stimulus.
Nationalbank’s decision put itamong a select few to adopt neg-ative interest rates, and its rela-tive success suggests such a pol-icy can be pursued withoutcreating unforeseen conse-quences for banks.
“The good news is that [thenegative rate] has had an impacton the currency market,” Mr.Rohde said. “It has been a veryefficient tool to avoid unwar-ranted capital inflows.”
In July 2012, with the eurocrisis deepening, investors werescrambling to sell euros and buyDanish kroner, then seen by in-vestors as less risky because ofDenmark’s relatively strong pub-lic finances. Nationalbank cut in-terest rates to sap investor en-thusiasm for the currency.
When the deposit ratereached zero, and with the kronestill rising, the bank cut the rateto minus 0.2% before later rais-ing it in January to minus 0.1%,where it has stayed since.
More than a year later, thekrone is little changed againstthe euro.
The euro currently trades atabout 7.461 kroner, comparedwith its high of 7.4311 kroner inmid-June 2012.
BY CHARLES DUXBURY
Denmark’sTop BankerExtolsRates Policy
The Russians came, and theysaved hotelier GustavoCabedo’s tourist season.
Spanish visitors to his TrypPort Cambrils hotel, down thecoast from Barcelona, haddwindled in recent years as theeconomy slumped. But a rush
of Russian and French touristsput off by turmoil in Egypt—and lured to Spain by fallingprices—has picked up theslack, lifting occupancy in the156-room hotel near the beachabove 90% this summer.
The growth in internationaltourism “has been vital,” saidMr. Cabedo, the hotel’s generalmanager. “I don’t wish anyoneharm, but problems in NorthAfrica have been good forSpain.”
Tourists have been flockingthis year to the euro zone’ssouthern vacation spots, boost-ing the struggling economiescollectively known as “ClubMed.” Foreign visits to Spainsince January have set a re-cord, while Greece and Portu-gal are enjoying banner years.
International tourist arrivalsin Southern Europe grew 6% inthe first half of the year overthe same period in 2012, a per-centage point above the globalincrease, according to the U.N.World Tourism Organization.
In the previous decade, rela-tive stability and new hotel de-velopment helped Egypt andother North African countriescompete for tourists seekingsun, sand and cultural attrac-tions, industry analysts say.
But falling prices in theeuro-zone periphery—hotelrates in Spain are down around10% since 2008—and the con-tinuing political upheaval thatbegan in the Arab Spring of2011 has made the Mediterra-nean’s northern shores lookmore attractive.
Cruise-ship operators areadding six Greek ports to theirroutes this year and next asthey cancel planned port callsin Egypt. The Finnish tour op-erator Finnmatkat canceled
trips to Egypt for more than20,000 people this coming win-ter, offering to route them toSpain’s Canary Islands andelsewhere.
The tourist boom under-scores how economic restruc-turing is helping Southern Eu-ropean countries regaininternational competitiveness.
In Greece, labor-marketchanges have helped cut pay-rolls—which account for about40% of a hotel’s operatingcosts—pushing down averagewage bills by a fifth. That hastranslated into an average 8%
reduction in rates in the pastyear, industry sources said.
In Portugal, where the At-lantic Algarve region enticesthrongs of British, prices forhotels and other services de-clined while spending by for-eign tourists rose 8.2%, to €3.7billion ($4.9 billion), in thefirst half of the year over 2012.
To be sure, tourist spendingis too small on its own to endSouthern Europe’s recession orsustain a recovery.
Still, it could make the re-cession shallower than forecastfor this year and hasten a re-
turn to growth, said Sara Bal-iña, a partner at Madrid-basedeconomic analysis firm Analis-tas Financieros InternacionalesSA. It is “an important stabiliz-ing factor” for Southern Euro-pean economies, she said.
Fears of an abrupt Greekexit from the euro zone havereceded in the past year. Theviolent protests that rockedAthens at the start of the crisisand frightened away would-bevisitors have petered out.
Carsten Palvig, a 62-year-oldDanish information technologydeveloper, a frequent visitor
for more than three decades,said Greece’s turmoil kept himaway for the past few years“but we thought we would tryit again this year.”
A few steps away, MargaretSmith perused tourist shopsbeneath the Acropolis. The 49-year-old real-estate agent fromVirginia had organized a 10-day trip with half a dozenfriends to Crete and the Greekcapital. “Who doesn’t want tocome to Greece anyway?” shesaid. “But the low prices werean extra inducement.”
The Greek government hasover the past few years easedvisa restrictions for variouscountries, including traditionalrival Turkey, helping to drawnew visitors. In Spain, regionaland central governments alsohave been trying to attracttourists from beyond the usualsources—Britain, Germany andFrance—by, for example, send-ing delegations to tourism fairsin Russia.
In Cambrils, a fishing port,foreign-tourist overnight stayssince January hit a record de-spite a 20-percentage-point de-cline in Spanish visits. Russiannationals accounted for 13% ofJuly occupancy this year, com-pared with almost none in2009, according to the localtourism board.
Mr. Cabedo said his averagerevenue per room has declined7% since 2009, in part becausehe is offering more promo-tions.
Vladimir Ovtchinnikoff, atourist from Moscow who sellstractor parts, said safety con-cerns about Egypt influencedhis decision to vacation inSpain. He marveled at thecleanliness of the water, de-spite the proximity of largeships and a chemical plant.
“I see tankers in the sea, butno oil fumes in the water,” hesaid. “It is unbelievable.”
By Ilan Brat in Cambrils,Spain, and AlkmanGranitsas in Athens
Sunbathers in Barcelona in July. Spain is picking up foreign tourists avoiding strife in northern Africa.
GettyIm
ages
Sun, Sand, Prices Buoy ‘Club Med’Weak Economies in Southern Europe Benefit as Tourists Pour In, Skirting Instability in Arab Vacation Spots
Visitors WelcomeA rise in tourism could help bolster troubled Southern European economies.
*Includes jobs indirectly supported by tourism industry. †Measured by International tourist arrivals for Spain and Greece, hotel stays by non-residents for Portugal. Sources: World Travel & Tourism Council; Bank of Greece; Spain’s Tourism Ministry; Portugal's National Statistics Institute
SHARE OF GDP IN 2012RELATED TO TOURISM
SHARE OF JOBS IN 2012SUPPORTED BY TOURISM*
CHANGE IN TOURISMFROM LAST YEAR†
Portugal 18.5% 15.9%
Greece 18.3 16.4
Spain 15.5 15.2
12.3January–June
Up 8.6%January–June
3.9Jan.–July
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