Cyprus is among countries whose economy will be directly impacted by Brexit, Moody’s rating agency said on Monday.
“The direct impact of Brexit is limited for most EU member states, although the effects on Ireland, Belgium, Spain, and Cyprus could be more significant,” Moody’s Investors Service said in a report on the effects of Britain’s exit from the EU made available in Nicosia.
Sarah Carlson, a Senior Vice President at Moody’s and lead author of the report, said that most EU member states have a limited exposure to the UK as an export destination.
But Ireland, followed by Belgium has by far the largest exposures through their trade links, while Cyprus and Spain benefit extensively from tourism.
One in every two tourists visiting Cyprus comes from the United Kingdom and any drop in arrivals will impact the Cypriot economy as it strives to stabilize a return to growth after being in the red for 12 consecutive quarters.
The Eurostat said that Cyprus achieved a 2.7 per cent growth in the first quarter this year, mainly from an increase in tourism by nearly 18 per cent.
Though the authorities say that they are not especially worried about this year, as bookings have been completed, any drop next year would jeopardize growth.
Cyprus was bailed out in 2013 but the economy is still fragile, with the construction sector, the steam engine of growth, still struggling to recover.
This was directly reflected in statistics on house prices announced by the European Statistical Service on Tuesday.
It said that house prices in Cyprus in the first quarter of 2016 marked a drop of 3.4 per cent relative to the previous quarter and a drop of 1.2 per cent on a year-on-year basis.
The drop compared with a 3 per cent increase in house prices in the euro area in the first quarter, relative to the fourth quarter last year and a 0.4 per cent increase on a year-on-year basis.