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Prolonged inflation biggest risk to economy

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A prolonged increase in prices is ranked by experts as the most likely negative impact on the Cypriot economy, according to a survey by the Competitiveness Council.

The “significant and prolonged increase in prices/inflation” has a risk index of 93% and is considered to have a 90% probability of happening and the severity of consequences 96%.

It is considered an immediate risk (in 0-2 years).

Inflation is followed by the “deterioration of climatic conditions”, with a risk index of 82%.

However, climate change is not considered an immediate risk but rather a risk that could happen in the long term (5-10 years).

The data was collected from April to June with the participation of 25 executives invited to give their assessments regarding the 17 most likely risks for the Cypriot economy.

According to the survey, the risk of “tensions in the Eastern Mediterranean with the possibility of an incident with Turkey” is ranked third with a risk index of 78% (62% probability of happening with 93% severity of consequences).

The next destabilising factor is the “mass influx of migrants”, with a risk index of 75% (70% probability of happening and severity of consequences 80%), followed by “cyberattacks”, also with a risk index of 75% (65% probability and 85% severity of consequences).

“Failure to execute digital transformation” is ranked sixth with a risk index of 74% (60% probability and severity of consequences 87%), followed by “Deterioration of public finances and a significant increase in public debt” with a risk index of 73% (64% probability and 82% severity of consequences).

Another event that could derail the economy is a “large drop in tourist arrivals” (59% probability and severity 87%).

The financial collapse of the general health system is also a big risk, with a 57% probability of occurrence and severity of consequences at 89%.