Nicosia, Cyprus. Economist Tassos Yiasemides said turmoil in the Middle East is expected to affect tourism, shipping, investment, energy, inflation and household purchasing power in Cyprus, depending on the intensity and duration of the conflict.
Potential impact on energy costs and households
Speaking to the Cyprus News Agency on Wednesday, Yiasemides said energy prices for households and businesses could rise, as electricity generation in Cyprus relies heavily on fossil fuels and imported supplies. He said the key issue is for the situation to be temporary.
Comparisons with previous fuel price increases
Yiasemides said that during the previous 12-day war, fuel price increases were temporary and could be managed in a similar way. He added that this time more countries are involved and Cyprus has to manage events of recent days stemming from the attack on the British bases.
Trade disruption and broader economic risks
He said Cyprus is an open economy with a strong dependence on imports of goods, and that broader disruption in global trade may lead to higher prices and delays in receiving certain products. Yiasemides said the economic impact should be assessed continuously, including effects on the growth rate and the annual budget.
Growth and budget pressures if conflict persists
He warned that if the conflict lasts more than a few weeks or months, Cyprus may see slower growth and pressure on the budget.
Inflationary pressures from oil and gas disruption
Yiasemides said extensive clashes in an energy-sensitive region raise concerns and negative consequences for the global and European economy, as any disruption to the production and transport of oil and natural gas drives up prices. He said a prolonged period of elevated oil and natural gas prices would lead to price increases and inflationary pressures.
How do you expect higher energy prices to affect your household budget?