Assessment of the impact of the Middle East conflict on the Cyprus economy

The Cyprus government and financial experts have assessed the national economy's resilience following the outbreak of conflict in the Middle East, which has reached its sixth day. Government officials stated that the local economy is expected to remain stable even if the crisis persists for up to four weeks. Risks identified include potential impacts on tourism, air connectivity, and inflation due to rising energy costs. While some airlines temporarily suspended flights, many have resumed operations, and international tour operators have maintained their summer plans. Panicos Nicolaou, CEO of the Bank of Cyprus, noted the country’s strong fiscal position, citing low public debt near 50% of GDP and budget surpluses. Furthermore, supply chain stability is reported at Limassol Port, and trade remains unaffected according to officials from the Cyprus Employers and Industrialists Federation. However, experts warn that a prolonged conflict could disrupt global oil and LNG supplies, potentially leading to inflationary pressures if the situation escalates.