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Demetris Taxitaris: Impact of current geopolitical events on Cyprus will be limited

In line with his current expert base-case scenario, Demetris Taxitaris, the CEO of MAP S.Platis, believes current geopolitical events in the region will have a limited impact on Cyprus.

In comments to CBN following the recent turmoil in the global markets and potential escalation of events in the Middle East, Taxitaris acknowledged, “Global markets have been turbulent in recent days and volatility has spiked being fuelled by two factors – renewed concerns of a recession in the US --following the US economic indicators released last week-- and its impact on the global economy as well as fears for escalation of the conflict in the Middle East, engulfing more countries.”

He continued, “I would add that some equity prices, including of technology stocks, had risen in recent months too fast and too high i.e. to levels which reflected many positive developments disregarding related risks of such developments materialising.”

Taxitaris went on to note, “While the probability of recession in the US has indeed risen, it is still questionable whether it is material plus there is a high likelihood that the Federal Reserve will provide support to the economy and the capital markets via a reduction in interest rates in its September meeting. Support for capital markets may also come from strong corporate fundamentals combined with much liquidity remaining on the sidelines for now.”

“As regards geopolitics in the Middle East,” the CEO went on to say, “tensions and risks have indeed risen there too and many scenarios have surfaced, increasing uncertainty and reducing conviction. In the absence of other evidence and based on many assumptions, our base-case scenario would call for the conflict to mainly concentrate in the north of Israel where Hezbollah operates from i.e. in southern Lebanon, with the limited involvement of Iran, mainly via its proxies”

Taxitaris went on to conclude, “As regards Cyprus, the economy seems to be fairing relatively well, with the Central Bank predicting growth of 3% for 2024, while inflation seems contained and unemployment is expected at 5.7%. In relation to geopolitical risks, if the base-case scenario above indeed prevails, then any impact on Cyprus would be very limited, if any at all.”

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