CAPE SOUNION, Greece (AP) — When Stelias Zompanakis quit his job at Greece’s central bank to try his luck in boat racing, friends and family begged him to reconsider.

Nine years later, he spends his summers aboard “Ikigai,” a 53-foot yacht he named after the Japanese concept of finding happiness through a life filled with meaning.

Week-long vacations on his yacht around some of the lesser-known Greek islands – Milos, Sifnos, Serifos, Kyfnos and many others – were booked through October.

“The demand is crazy,” said Zompanakis, who recently walked barefoot on the teak deck to adjust the sail and check the dashboards as the boat whizzed past the ancient temple of Poseidon on a cliff top south of Athens.

Tourism around the Mediterranean is booming. Helped a strong US dollar and pent-up demand from Europeans to hit the beach after years of travel restrictions linked to COVID-19 has been a stronger comeback from the pandemic’s downturn than many expected, leading to long queues, canceled flights and lost luggage this summer in many European airports, but not in Greece.

“People after COVID, after two years of frustration, probably put their money away and decided they needed a vacation,” Zompanakis said. “And I think the revenue from their budgets that they’re willing to spend has gone up, and that’s also brought more quality … and that’s helped Greece a lot.”

Greece is on the verge of breaking the annual record for tourism receipts. Portugal is also expected to make a full recovery, while late summer figures suggest Spain, Italy and Cyprus will finish the year shy of pre-pandemic visitor levels.

A boon for Europe’s southern economies, the rebound is also softening the continent’s tilt toward recession brought sharp rise in energy prices, war in Ukraine and enduring disruptions caused by the pandemic.

“For countries like Greece and others like Italy and Spain, they have actually created a lot of resilience over the summer … despite the tsunami that comes from the cost of living crisis and the energy crisis,” Lorenzo Cadogno said. , Chief Economist at LC Macro Advisors and Visiting Professor at the London School of Economics.

Europe’s Mediterranean coast also offers safe and cultural destinations, Cadonho said, but the good news may not last.

Economic growth in 19 countries using the euro according to a new forecast by the International Monetary Fund, it will fall to 0.5% in 2023 from an increase of 3.1% this year.

Greece, Italy, Portugal and Spain have the highest levels of debt in the eurozone relative to the size of their economies and are also facing rising borrowing costs.

Stephen Rooney, a senior economist at Oxford Economics who specializes in tourism, says that countries that depend on tourism will eventually feel their industry hit harder next year cost of living crisis driven by sharp inflation and high electricity bills.

“There is an expectation that these issues will start to bite as we move into the last quarter of this year and into 2023,” he said. “We don’t expect the travel recovery to stop in 2023, but we do expect it to slow somewhat in 2023 in line with the overall economic downturn before picking up again in 2024.”

In Athens’ historic Plaka district, tourists still crowded the narrow streets in mild late October, flocking to ice cream vendors and stopping to browse shops selling leather bags, jewelry, hats and souvenirs.

At Loom Carpets, co-owner Vagan Apikian folded and folded carpets and laid out shoulder bags for customers, pleased that demand remained strong into the fall.

“Business has been very good: we had many more visitors than in 2019, which was a record year. This year was even better,” he said.

As the days get shorter, and economic forecasts of the European Union are deterioratingGreece and other southern member states have renewed national efforts to create year-round holiday destinations, hoping that hiking trails, rock climbing and visits to historic churches can cushion the winter drop in arrivals.

But year-round tourism also exposes weaknesses in governments’ ability to plan and coordinate action, said Panagiotis Karkatsoulis, a senior policy analyst at the Athens Institute for Regulatory Studies, who has advised governments in southern Europe and the Middle East on policy reforms.

“It doesn’t make much sense to advertise a route to a historic monastery that closes at 3 p.m., or to try to take elderly people to a destination with bad roads and no access to a hospital… tourism exposes all the weaknesses of the administration,” he said.

This winter’s windfall, he argued, would need to continue to be funded state aid to enterprises and households in a difficult situation rather than going for long-term improvements.

“Anything like tourism that creates wealth is undeniably positive,” he said. “But how that money is spent is another conversation.”

AP reporters Theodora Tongas and Lefteris Pitarakis in Athens, Barry Hutton in Lisbon, Portugal; Raquel Redonda in Madrid; Menelaus Hadjicostis in Nicosia, Cyprus; and Colin Barry in Milan contributed.