Government vulnerable to rising fuel costs amid Middle East tensions

Economist Pampos Papageorgiou recently addressed the potential economic consequences that the ongoing conflict in the Middle East may bring to Cyprus and Europe. In an interview with SPOR FM and DIASPORA NEWS, Papageorgiou provided insights into the likely repercussions.

He emphasized that in Cyprus, the rise in fuel prices is expected to be more pronounced due to the heavy reliance on mazut for electricity production. Consequently, Cyprus is more vulnerable to increases in the cost of this primary energy source.

Already, a 3% increase in electricity bills has been announced for the upcoming billing cycle, though these were calculated based on the previous load's prices. If the crisis in Israel does not de-escalate, further electricity tariff hikes may be anticipated.

According to Mr. Papageorgiou, the increases in fuel prices could indirectly impact the maintenance of high interest rates in Europe. He also mentioned the potential strain on the Cypriot tourism sector.

"All these considerations are subject to the question of whether the conflict will escalate. So far, it appears that neither Syria, Lebanon, nor Iran will become directly involved in the conflict," he noted.

Simultaneously, he highlighted Cyprus's role as a temporary hub for people and businesses. "If the war persists, we may witness a stronger presence of Israeli companies in Cyprus," he added.