OEB Director General: “The situation is manageable, but…”
Marios Roussos 10:37 - 23 October 2023
The war in Israel is definitely a cause for concern, not just in terms of the region’s stability but also – in Cyprus’ case – the economy and business ties between the neighbouring countries.
“We don’t have any serious investments by Cyprus in Israel,” said Michalis Antoniou, the Director General of the Cyprus Employers and Industrialists Federation (OEB), speaking to InBusinessNews. “However, Israel has large investments in Cyprus.”
But he said he doesn’t believe the impact on the local economy will be that severe; for the time being.
“It is a geopolitical dimension that has been added to the rest, which definitely is a very negative thing,” said Antoniou. “However, if it ends soon, the damage will be manageable,” he added.
Israel is currently one of Cyprus’ largest tourism markets. Having already lost the huge Russian market, the loss of a second significant contributor is indeed alarming.
Here, said Antoniou, the damage will depend on the duration of the war; yet still, he believes the situation is manageable.
“Tourism inflow will be affected, as we have invested a lot in the Israeli market and the trends were clearly on an upward trajectory,” said Antoniou. “It is good that we are at the end of the season, however, preparations for the next season begin immediately after this one ends. A numbness has already been observed. If these tragic events end soon and the situation doesn’t take on new dimensions, the effect on tourism will be manageable,” he said.
The business environment
There is some concern when it comes to the new large development projects whose clientele comes from Israel. “We have noticed a heavy climate in these business circles,” said Antoniou. But on the other hand, he added, an increasing number of Israelis have been arriving on the island for safety reasons. “If there is a conclusion soon, the damage will be manageable for 2024. There is already strong activity by Israeli investors in Cyprus,” he said.
But there are still certain issues, said Antoniou. Businesses that have direct transactions with Israel and are active there could face problems, he explained.
Another huge concern is the impact the war is having on energy prices. “The great concern is the impact of the fuel prices on everything and the cost of energy,” he pointed out. “The energy and fuel sector already appears to have been affected on a global level and analysts are raising the alarm. Mainly because the economy is already under pressure from high inflation and interest rate hikes.”
Cyprus has managed to stay afloat following successive crises; how much more can it take though? “Cyprus has shown impressive resilience when it comes to the real economy. However, this resilience is dropping constantly because the crises are perpetual. This is why serious decisions are needed for the economy,” said Antoniou.
Concluding, he advised against panicking and said he hoped there will be a positive outcome soon. “Our message is stay calm. OEB is systematically monitoring all the developments and what we can say right now is that for the time being, there are no serious causes for concern,” said Antoniou.