Europe’s Summer of Recovery Is More Fragile Than It Looks

ALBUFEIRA, Portugal — Until last week, Raissa Moura and her co-workers at the reception desk of the Pine Cliffs Resort were feeling optimistic that life was returning to normal along Portugal’s Mediterranean coast.

The previous year, as the pandemic halted travel, they had fretted over the desolation of the usually bustling, 1,300-bed hotel and villa complex. They had suffered layoffs and worked weeks on end inside an eerily quiet lobby processing cancellations. Outside, foxes brazenly wandered the abandoned grounds.

But this summer was already shaping up nicely in the Algarve, Portugal’s leading tourist destination. Cases of Covid-19 had dropped so dramatically that Britain had designated Portugal a so-called green country, permitting its citizens to visit without having to quarantine on return. The sun loungers arrayed beneath the pine trees were full of people hoisting cocktails. The resort’s eight swimming pools echoed with the sounds of splashing children.

“It feels hopeful,” Ms. Moura, 28, said on a recent afternoon. “The resort is alive again.”

But the next day, London jolted Portugal by revoking its green country status, citing a troubling rise in cases. Ms. Moura and her colleagues braced for another surge of cancellations. Along the coast — from seaside palapas to cliff-top restaurants to car rental lots — people whose livelihoods depend on tourists abruptly started to prepare for another lost summer.

Ever since the pandemic emerged, policymakers in wealthy countries have depicted lockdowns as an effort to halt the spread of the coronavirus. Governments cushioned affected workers while waiting for the public health threat to recede. Eventually, the thinking went, they could safely turn the economy back on.

Countries that are heavily reliant on tourism appeared likely to benefit, among them Greece, Italy and Spain. None was better placed than Portugal, where — before the pandemic — tourism made up nearly one-fifth of overall economic activity, according to government data.

During the first three months of the year, as the government imposed a lockdown, Portugal’s economy contracted by an alarming 3.3 percent compared with the last quarter of 2020 — far worse than the 0.6 percent slide experienced by the eurozone.

The pain appears to have yielded a substantial gain: From January to May, Portugal’s new Covid cases plunged to less than 200 a day from more than 15,000.

“We are already starting to see a better public health picture, and so things are also improving in the economic picture,” said Ricardo Amaro, a senior economist at Oxford Economics.

Britain’s decision to list Portugal as a green country was especially significant. The British traditionally flock to Portugal as a respite from their often-dreary weather, much as New Yorkers use Florida to escape winter.

Portugal received more than 2 million visitors from Britain in 2019, according to the national tourist board. Only neighboring Spain sent more.

In the Algarve — a seaside empire of villas, resorts and golf courses — the region’s unemployment rate sits stubbornly above 10 percent, compared with 7.1 percent for Portugal as a whole. The reawakening of tourism was supposed to fix that.

Between May and July of last year, Ms. Galvão, 41, a single mother of two boys, relied on loans from friends to buy groceries. She now works for a nonprofit that collects food from area supermarkets and delivers it to households in need.

“Many, many people who have lost jobs still haven’t been able to find new ones,” she said.

Continued anxiety about job security limits sales for local businesses, discouraging them from hiring — a feedback loop of lean fortunes.

At a beachfront cafe in Quarteira, glass shelves display freshly baked pastries — regional delicacies like fig and almond cake, and national standbys like Portuguese egg tarts. But sales are weak, complained the proprietor, Manuel Picareto, 71. Most of his customers are locals who work in tourism.

“Instead of two pastries, people buy one,” Mr. Picareto said.

As villa owners canceled trips last year, they scrapped swimming pool maintenance and landscaping, ravaging the books of, a company owned by a Ukrainian couple, Iryana and Sergii Liashenko.

“Our income is down 75 percent,” said Ms. Liashenko, 37.

The Liashenkos had been feeling hopeful as their phone rang in recent weeks. Villa owners were returning. Their pools and gardens were choked with weeds and algae. Irrigation systems needed repair.

“We think we’ll have more money coming in,” Ms. Liashenko said.

A few hours later, the British government pulled Portugal’s coveted green country designation. The news resonated like a thunderstorm on a wedding day.

“Everybody’s crying,” said Cláudio Lopes Meireles, a Brazilian who owns a gelateria in Albufeira, using an unprintable word to describe what Britain had just done to local fortunes. “We live by English tourists.”

In anticipation of fewer sales, he was limiting his purchases of imported supplies — pistachios from Sicily, cocoa from Belgium — exporting austerity to the rest of the continent.

Given the need for social distancing, it cannot run a breakfast buffet, but it lacks enough staff for efficient sit-down service, leaving guests waiting at tables for orders.

Mr. Schoen has built up cash reserves against future troubles. He has put off an investment into a new children’s club and delayed the planned refurbishment of restaurants.

“I believe in the good things to come, but we also need to be realistic,” Mr. Schoen said. “I’m not convinced we have overcome every bump in our way. We will keep holding back until there is a good level of certainty.”

The next day, Britain downgraded Portugal from an approved holiday destination to a potentially dangerous breeding ground for coronavirus variants.

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