The economic fallout from the Israel–Iran conflict could pose serious challenges for Cyprus, according to economist Tasos Yasemides. Speaking on Tomes sta Gegonota, he warned that the Middle East escalation impact on Cyprus goes beyond military concerns- it threatens key sectors including tourism, investment, and shipping.
“The problem is that we may be considered part of the region,” Yasemides said, stressing that international perception is crucial. If Cyprus is seen as being within the conflict zone, it could directly affect its economy.
Tourism and investment under pressure
Yasemides noted that Israel is Cyprus’ second-largest tourism market. A prolonged crisis or perceived instability could drive tourists elsewhere.
Additionally, he warned that many Israeli investments in Cyprus may be frozen. Israel’s economy is already under immense pressure due to the cost of military operations, reducing the ability of Israeli investors to continue or expand their activities locally.
“There is a huge cost to this war,” Yasemides said, “and the Israeli state budget will be stretched thin.”
Rising costs in shipping and energy
The impact on Cyprus also extends to shipping, a pillar of the island’s economy. War-risk insurance premiums have already risen by 60%, and freight rates are climbing due to increased operational risk.
“These costs will eventually pass to businesses and consumers,” he warned, forecasting inflation in imported goods.
Supply chain disruptions are already being felt, exacerbated by Houthi attacks in the Red Sea and delays through the Suez and Panama Canals. “As an island economy, Cyprus is especially vulnerable,” he noted.
Uncertainty is the true threat
Ultimately, Yasemides argued, the most damaging factor is uncertainty. Even if ceasefires hold, the risk of isolated terrorist attacks or renewed clashes keeps investors cautious.
“We all hope for stabilisation,” he said, “but at the moment, the markets are unsettled.”
Also read: Impact of Middle East war on Cyprus grows amid Hormuz threat
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