Serious risks to the Cyprus economy if tensions escalate - The business world’s concerns

The escalation of tension in the Eastern Mediterranean region following Iran's strike on Israel has alarmed businesses in Cyprus, which have expressed fears about serious repercussions for key sectors of the economy.

The developments in the region are now being closely monitored by all the relevant financial bodies, with the Minister of Finance, Makis Keravnos, convening an emergency official meeting on 15 April, during which the developments and any possible effects on the economy were reviewed.

However, although the meeting established that, for the time being, there are no apparent risks for the Cypriot economy, the Ministry of Finance will nevertheless closely monitor the developments and is ready, if necessary, for to undertake necessary actions and measures.

OEB’s Michael Antoniou: There are serious risks for the economy

The developments in the region are also constantly being monitored by businesses, with the Director General of the Cyprus Employers and Industrialists Federation (OEB) Michael Antoniou, who stressed that there are serious risks for the economy from a further escalation of the tension.

In his statements to InBusinessNews, Antoniou said that "since the day Iran warned of retaliation, the pressures on fossil fuel prices were great and we also noticed some increases in the prices of oil, natural gas, etc."

"Of course, the prolonging of the uncertainty, conflicts and geopolitical instability, constantly create areas of risks and deterioration of the situation in the economy as well, but the truth is that the development from midnight last Saturday until today finds the markets, for the time being, in a calm state," he added, noting that "on the one hand, the Stock Exchanges are moving at normal rates, while on the other hand, oil prices even showed a slight decrease."

According to the Director General of OEB, "the markets are calm, due to the fact that the development on the war fronts was such that it justifies a calm reaction, mainly because we did not, it seems, have any victims from the attacks. It also seems that Europe and America are trying to contain the reaction on Israel's side so that we don't have a generalisation or expansion of the phenomena."

"At the moment the markets are in a state of calm management of the events," further assessed Antoniou warning that "when the scene is so fluid and threats of retaliation against each other are constantly on the table, it is obvious that any accident or loss of control by anyone who thinks they can control events of such magnitude and severity, can easily create a relapse."

"We hope that such a relapse will not be caused, that the situation will normalise and that diplomacy will take the reins again," he stressed.

Asked about this, the Director General of OEB stated that, "on our side, it is necessary to continuously monitor the developments, especially when there are tensions and abnormal incidents, but, unfortunately, the possibility of intervening in the developments and what happens is completely outside the control of the Cypriot business world."

"If some events lead to an increase in the price of fossil fuels and, by extension, electricity, goods, food and raw materials, there is a risk of a repeat of recent phenomena with inflationary pressures, maintenance of high interest rates, etc. Mr.", he warned, expressing the hope that "we will not have such developments".

"We are constantly analysing the data. Fortunately, our economy is on a much stronger footing than it was 12-13 years ago and resilient enough to withstand shocks of small or medium intensity. At the same time, we also have cushions in public finances, which we hope we won't have to use," he concluded.

CCCI’s Marios Tsiakkis: We will be affected by developments in the region

For his part, the Secretary General of the Cyprus Chamber of Commerce and Industry (CCCI), Marios Tsiakkis, speaking to InBusinessNews, emphasised that "there is no doubt that the developments in the region will affect us and we are undoubtedly concerned about the situation as it is taking shape, because it creates further tension, uncertainty and insecurity."

As he explained, "when there is a possibility of a general conflict in the region and especially since we are very close to this region, it affects us in many ways."

First and foremost, he added, insecurity is being created in the region. "We are a country very close to the region and although we are not involved in the crisis, it still affects us. We are a tourist country, at the beginning of the tourist season, and such a situation creates concern for travelers about whether they should travel to the region, fearing a more general conflict," Tsiakkis pointed out.

Beyond that, he added, "it is anticipated that fuel prices will be affected, creating additional insecurity and uncertainty. At the same time, ship traffic is also affected, since now the insecurity is increasing further and therefore more and more ships will bypass the Suez Canal, going around Africa."

"If logic and diplomacy do not prevail, in order to reduce the possibility of a more general conflict, then Cyprus will be more affected", warned the Secretary General of CCCI.

Responding to a related question, Tsiakkis said that "we are closely monitoring the developments, but, unfortunately, we cannot intervene in any way. For this reason, we emphasise that reason should prevail, diplomacy should be used and moves should be made on both sides to de-escalate the situation, because if it gets out of hand things will become much more serious".

"We are waiting to see how things will develop and how much they will affect us. Our main concern is tourism, fuel prices that will lead to an increase in energy costs, as well as the impact on ship traffic, which may lead to an increase in prices of basic goods and products", concluded the Secretary General of CCCI.

(Source: InBusinessNews)