Cyprus’s economy is holding up under the strain of the Middle East war, with the government’s economic team concluding it can withstand the disruption for up to four weeks without serious damage, Finance Minister Makis Keravnos said.
Technocrats at the Finance Ministry have run both baseline and worst-case scenarios, finding the economy to be well-shielded.
Keravnos briefed the Cabinet on the initial findings and told Phileleftheros that if the conflict extends beyond that period, inflationary pressure from rising oil prices would follow — but said the government could manage the situation.
“If there are increases from a possible rise in oil prices, the economy is in a position to absorb limited inflationary pressures,” he said.
The minister described the country’s cash reserves as satisfactory and its economy as resilient.
He added it was too early to draw conclusions, but said the resumption of flights by some airlines would help address any disruption to tourism bookings and arrivals if the crisis drags on.
The two main risk areas identified by the government are tourism and air connectivity, and inflation. On connectivity, the situation appears to be stabilising as several airlines that had temporarily suspended flights to and from Cyprus have resumed operations.
Foreign tour operators at a tourism fair in Germany also told Cypriot authorities they have no plans to change their summer schedules.
On inflation, the government believes any sharp pressure can be contained. February’s annual inflation rate stood at 0.1%, near zero.
Next Tuesday, Keravnos will chair the ECOFIN Council of Ministers, where developments in the Middle East and their potential impact on the European economy will be discussed.
Government Spokesman Konstantinos Letymbiotis said the state has the tools and capacity to handle the fallout and support citizens. On tourism, he said a response plan could only be defined once “the extent and duration of this regional crisis” was established.
Finance Ministry technocrats are continuing to monitor developments and brief the minister.
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