Cyprus stands to lose 1.5%-2.0% of GDP in 2022 if the airspace closures with Russia stay in place for the entire yr, DRBS Morningstar score company stated on Monday.
The affect may very well be a lot decrease if the restrictions are lifted earlier than the summer season season or if Russian vacationers are capable of finding various routes to Cyprus, the company additionally stated.
“The struggle in Ukraine will affect negatively development this yr, nevertheless, it mustn’t derail Cyprus`s medium-term prospects,” it additionally stated in a commentary.
“The introduction of sanctions and counter sanctions resulting from Russia`s invasion of Ukraine has elevated the draw back dangers to in any other case sturdy medium time period financial prospects for Cyprus,” it added.
Recalling that Russia has been Cyprus’ second vacationer market, DBRS stated that given the significance of Russian inbound tourism the flight bans might curtail round 20-25% of the general vacationer inflows to Cyprus in 2022.
Though DBRS Morningstar expects the Cypriot tourism trade to draw vacationers from different supply markets as an alternative, together with from the UK.
“Even when the sanctions affecting flight availability are short-lived, the inflows of Russian vacationers to Cyprus, are anticipated to be severely impacted by the huge impact of the sanctions on the Russian forex and its financial system,” the company stated.
Moreover, DBRS Morningstar famous that, though Cyprus financial system has confirmed extra resilient than anticipated with the financial system recovering sooner than anticipated, “the European Fee`s development forecast for Cyprus of 4.1% in 2022 printed in February earlier than the invasion now seems optimistic.”