Cyprus has recorded a significant economic impact following recent geopolitical tensions, with economist Tasos Yasemides highlighting pressure points in tourism, inflation and household purchasing power.
Speaking on the Sigma TV programme “Mesimeri kai Kati”, he said tourism bookings dropped by around 30% to 35% during March and April, although last-minute bookings indicate that Cyprus remains a stable and safe destination.
High airfares weigh on tourism recovery
Yasemides noted that expensive air tickets continue to act as a major deterrent for visitors.
He explained that rising fuel prices have pushed up airline fares, directly affecting travel demand and overall tourism performance.
Industry stakeholders are hoping that the overall decline in tourism for 2026 will be limited to around 10%, rather than the sharp short-term drops already recorded.
Inflation driven by energy dependence
The economist stressed that Cyprus remains heavily dependent on international energy prices, which are already reflected in rising fuel and electricity costs.
He said this reliance on fossil fuels continues to feed inflationary pressures, with inflation currently at 3.6%.
Transport costs also contribute to higher prices for goods and services, further increasing the cost of living for households.
European Central Bank policy outlook
Despite expectations of gradual inflation easing, Yasemides warned that the European Central Bank is still considering further interest rate adjustments if inflationary pressures persist.
He added that Cyprus faces additional structural challenges as an island economy, including higher import costs and energy dependency.
Household purchasing power under pressure
Yasemides said rising inflation reduces household purchasing power, particularly for those not covered by automatic wage indexation mechanisms.
He also highlighted the combined burden of high housing costs and elevated private debt levels, a trend also seen in countries such as Greece, France and Germany.
No repeat of 2013 crisis expected
Asked whether Cyprus could face a financial crisis similar to 2013, the economist said current conditions are fundamentally different.
He noted that the country now operates under stronger institutional safeguards and European oversight, with Cypriot banks supervised by the ECB and EU-level support mechanisms in place.
However, he cautioned that fiscal discipline remains essential, urging the state to avoid excessive spending and focus resources on productive areas of the economy.
He also called on political actors to act responsibly and cooperate in economic decision-making.
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