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23 May, 2024
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Middle East conflict fuels fear of $100 per barrel

What lies ahead for Cyprus and global markets?

Panayiotis Rougalas

Panayiotis Rougalas

The recent Iranian attack on Israel serves as a stark reminder of the ever-shifting geopolitical dynamics in the Middle East, with potential ramifications extending even to Cyprus. Since 2019, the region has been rocked by health crises, geopolitical turmoil, and conflicts, each reverberating globally and forcing constant economic recalibrations by nations. Citizens bear the brunt of these crises, grappling with rising costs of essentials like food, shelter, and fuel, perpetuating a vicious cycle of inflation. Events like Sunday's attack, based on past crises, have the potential to further exacerbate this instability.

Since 2022, consumers have been grappling with inflation, now crystallized into what's known as the "wage crisis," as citizens find themselves dipping into their savings to cope with escalating expenses. Similarly, businesses face challenges as consumer purchasing power has shifted since 2022, compounded by ongoing conflicts and tensions. Currently, businesses are in a state of cautious anticipation regarding the unfolding crisis in the Middle East, with looming risks on the horizon.

Global markets are closely monitoring developments in the region, particularly Israel's response to the recent attacks. While the Cyprus Stock Exchange saw modest gains on Monday, Tuesday brought about a decline amid mounting concerns over geopolitical tensions. Attention is particularly focused on the oil market, with the possibility of prices escalating from the current $90 per barrel to $100 should tensions continue to rise.

The Ministry of Finance seeks to reassure citizens that, for the time being, there are no immediate threats to the Cypriot economy arising from the regional developments. However, the ministry remains vigilant, ready to implement necessary measures should the situation warrant it. Following an emergency ministerial meeting convened by Finance Minister Makis Keravnos, it was emphasized that all potential economic impacts from the crisis are being carefully assessed. The ministry underscores the need to closely examine factors that could directly impact the economy and sectors that may be particularly vulnerable to any escalation of the crisis.

[This article was translated from its Greek original]

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