Cyprus to lose 2% of GDP due to travel Sanctions imposed on Russia

1.5 to 2 percent of Cyprus GDP (GDP) could increase in 2022 if Cyprus' Mediterranean island is shut for Russian tourists for the remainder of all year long, the rating agency DBRS Morningstar has revealed.

The agency says that the sanctions that Cyprus has placed on Russia following the invasion by Ukraine have affected the tourism industry in Cyprus, which could result in nearly 2 percent of GDP disappearing, considering that tourism contributed 13.8 percent of Cypriot GDP in the year 2019 visaoperations.com reports.

"DBRS Morningstar has estimated it is possible that Cyprus might suffer a loss of 1.5 percent to 2 percent of its GDP by 2022 if the airspace shut-down remains in place for the entire year. The consequences will be less if the restrictions are lifted prior to the start of summer or in the event that Russian tourists are able to find alternatives towards Cyprus" the agency said.

To top it off that the tourism sector in Cyprus was in a state of decline as it was able to come out of 2 years of restrictions on travel, which made it hard for the country's tourism industry to attract visitors amid the pandemic. In addition, Cypriot tourism can experience another 20-25 percent decrease in the number of tourists arriving due to the fact that the Russian market is the second-largest market in Cyprus.

The agency also emphasizes that this loss is recouped for the bulk of it. They also point out that travelers who come from different markets show increased enthusiasm for the islands, particularly tourists coming from Britain.

"It is obvious that the industry of tourism could be under pressure in the short term due to the decline in Russia However, the competitive advantage of Cyprus with regard to its attraction for tourists, will be positive for the year ahead," the report says.

The agency is of the opinion that COVID-19 is a step towards improving the situation within the EU and boosting measures offered by the 27-nation bloc will help the economic growth of Cyprus.

DBRS adds the fact that " the European Commission's projection for growth of 4.1 percent by 2022 seems promising." The World Travel & Tourism Council (WTTC) has previously reported that tourism was responsible for 13.8 percent of Cypriot GDP in the year 2019.

The exports of financial services of Cyprus towards Russia have risen in recent years, adding up to around 7 percent of Cypriot GDP by 2020.