Cyprus government warns duration of Middle East crisis will define economic fallout

Cyprus economy resilient enough to withstand regional shock, says spokesman

Government spokesman Konstantinos Letymbiotis on Thursday said that the Cyprus government is conducting ongoing assessments of the economic impact of the crisis caused by the conflict with Iran, stressing that its duration will determine the scale of consequences for the country.

Speaking during a briefing at the presidential palace, Letymbiotis explained that preliminary evaluations have already been carried out by the government.

“It is an issue that concerns the entire region, I think the whole world and the European Union,” said Letymbiotis.

“At the level of the Republic of Cyprus, initial estimates have obviously been made,” he added.

He mentioned that there was an initial briefing and exchange of views today by Finance Minister Makis Keravnos during a cabinet meeting.

“However, the determining parameter, the decisive factor that will define the outcome is how long this regional crisis will last,” the spokesman stated.

He explained that the government and the finance ministry’s economic team are continuously evaluating developments, while highlighting the importance of responsible fiscal management during periods of uncertainty.

“All assessments are being carried out on our side,” said Letymbiotis.

“It is precisely in such extraordinary and unprecedented circumstances that the importance and value of responsible fiscal policies becomes evident in practice,” the spokesman added.

“It is important to have solid foundations in the Cypriot economy so that when these extraordinary conditions arise the state has the tools and the ability to respond and support citizens where necessary,” he continued.

Moreover, Letymbiotis said that “the situation is constantly being evaluated by the government’s economic team and the finance ministry, and we hope that the regional crisis will de-escalate as soon as possible”.

“This is the view, the will and the effort of the international community,” he stressed.

Responding to questions about possible measures to protect Cyprus’ tourism sector, particularly amid flight cancellations linked to the regional crisis, Letymbiotis said the government is monitoring developments closely.

“In order for a plan to be determined and defined, the extent and duration of this regional crisis must first be identified,” said Letymbiotis.

He clarified that flight cancellations are not directly related to Cyprus, but rather reflect wider operational decisions by airlines during the regional crisis.

“Flight cancellations do not concern Cyprus,” Letymbiotis said.

“They concern decisions by companies in response to the regional crisis or the closure of airspace in the region for flights that would pass through the Republic of Cyprus,” he explained.

Letymbiotis also indicated that some airlines have already signalled a resumption of services.

“We have already been informed of companies that have announced they will restart their flights from tomorrow, while others will resume in the coming days,” he said.

He added that the government is examining potential effects on tourism and other sectors, stressing that any support measures would depend largely on how long the crisis lasts.

“Everything is being evaluated and examined to determine the possible impact and how these industries could be supported, but this will mainly depend on the duration of the crisis,” Letymbiotis stated.

“We are in full coordination at all levels and in contact with the European Union, and we hope this crisis will end as soon as possible,” the spokesman added.

Asked whether the Finance Minister had informed the Cabinet about the resilience of state finances in a worst-case scenario, Letymbiotis emphasised the strength of the country’s economic position.

“The assessment being carried out takes place at various levels,” he said.

“I have said that there are solid economic foundations and that the Cypriot economy is currently in a very good position,” he added.

Letymbiotis also highlighted key macroeconomic indicators supporting Cyprus’ resilience, including growth, declining public debt and a budget surplus.

“The growth rate, the reduction of public debt, the surplus held by the Republic of Cyprus and the very low inflation rate in our country demonstrate that the state is in a position to respond and support citizens in this unprecedented crisis,” he said.

However, he stated that a full assessment will depend on international and regional developments.

“In order for a comprehensive evaluation to take place, it must be examined in relation to international and regional developments and the period during which these are unfolding,” Letymbiotis explained.

“What I can tell you is that this assessment is carried out every day in accordance with new developments, and the Cypriot economy is resilient,” he concluded.