While the Cyprus economy may be resilient enough to withstand the fallout from the conflict in Israel, the country could still be at risk of being classed as a danger zone if the situation escalates into a broader war, economists have warned.
But they said it was still too soon to tell for sure.
“The big question is how long the conflict will last before we can make any assessments over the economic impact,” economist Marios Clerides told the Cyprus News Agency (CNA). “The consequences will depend on how soon or how late the war will end and if there are other geopolitical consequences in the surrounding area.”
One sector that is sure to be affected, according to Clerides, is the tourism sector, what with Israelis traditionally being a really strong market (official figures for August show they were the second largest group of visitors to Cyprus at 14.9%).
But, he added, the Cyprus economy is resilient and it has proven so.
The Chairman of the Cyprus Hotels Association (CHA), Thanos Michaelides, was also concerned about the impact on tourism, telling CNA that Israel, “as the second most important market for Cyprus”, is a crucial market for Cyprus, and hoteliers are very concerned about the recent developments.
He added that the association is strongly against the terrorist acts that have affected the people of Israel and expressed sorrow over the recent developments, expressing hope that the entire situation will come to a peaceful resolution.
“Our main concern is for the war to stop,” he said. “What we are seeing is tragic.”
Responding to a question about the impact on hotel reservations, Michaelides mentioned that after the start of hostilities, some visitors departed more quickly, while others extended their stay in Cyprus by one or two days.
“Additionally, some individuals arrived in Cyprus for a short stay, hoping that the situation would calm down, and they could return to their homes,” he said.
Economist at the University of Cyprus Marios Christou told CNA that though it was too early to come to any real conclusions about the conflict’s impact on Cyprus, “it’s possible in the long term this war will affect us”.
He too agreed that it depended on the duration of the war, as well as to what extent other countries – such as Lebanon – may become involved.
But on a more positive note for the country, said Christou, many Europeans living in Israel are now likely to move to Cyprus for safety, at least until the situation clears up, while we may also see businesses decide to relocate from Israel to the island.
But again, he conceded that if the war drags on and region is declared a war zone, this will have a serious impact on crucial sectors of Cyprus’ economy, especially tourism.
