Cyprus impact from Chinas turbulent markets still uncertain economist says

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first_imgBy Stelios OrphanidesRecent instability in Chinese financial markets and uncertainty over the country’s growth may find its way into the Cypriot economy, even as the way it will affect it remains unknown, an economist said.“When major countries fear the impact from China’s bloodletting, then we should also be concerned,” the economist at a government body said in a telephone interview on condition of anonymity, citing the lack of authorisation to talk to the press on the matter. “Still, there are many other factors that may offset some of the impact”.He said that because of the asymmetry in the size of the Chinese and Cypriot economy, as well as their respective populations, “slight changes” of some factors in China, could have a considerable impact in Cyprus via various channels, such as real estate or tourism.While a direct effect on the Cypriot economy via a drop in demand for ships to transport goods exported from or imported to China is not ruled out, its extent remains unknown, the economist said, adding that he is “more concerned about the indirect impact of China’s troubles to economies with which Cyprus has stronger, direct trade ties”.By way of examples, the economist named the possible impact on the Russian economy, which is a major source of business for Cyprus’s business services sector and tourism industry, or Arab countries, to which Cyprus also exports goods and services.“There are too many factors, and the margin of error is also too big,” the economist added.A source at a shipping management company, who also spoke on condition of anonymity, said that China’s lower growth is already having an impact on Cyprus’s shipping industry for “six months, almost a year now”.According to the World Bank’s latest forecast, China’s economy, the world’s second largest, is expected to grow 6.7 per cent in 2016 before growth slows down to 6.5 per cent next year, after growing an estimated 6.9 per cent in 2015. The Chinese economy grew 7.3 per cent in 2014.“The situation affects bulk carriers most, as fares are already at the bottom, but because of this they are not expected to further drop,” the source said. “The situation is also bad with respect to container carriers. The critical question, however, is how long this situation is going to remain so”.The source added that the drop in bulk and container cargo fares affects mainly companies owning ships and those managing them. “Therefore, Cyprus is not expected to be that affected, as its shipping sector consists mainly of ship management companies”.“Still, the drop in the price of oil was good news for tanker owners,” the source said. “Because of this demand for oil has increased and more cargo is shipped, which resulted in better cargo rates”.The Baltic Dry Index, which refers to rates for bulk cargo such as coal or ore, stood on Friday at 445 points, which is the lowest in a year after falling 6.9 per cent since January 1, according to a Bank of Cyprus document seen by the Cyprus Business Mail. The Baltic Dirty Tanker index rose 20 per cent to 1,043, which is close to the 52-week peak of 1,070. The barrel of Brent oil was traded today below $34, which is near a 12-year low.An official of the ship-owning sector, who also spoke on condition of anonymity, said that while the drop in cargo fares force some companies to operate at “loss or at breakeven,” it still opens opportunities for some other shipowners to expand their fleet.“Those who have a good name in the market, are supported by banks and may take advantage of opportunities to buy ships worth $50m for only $15m,” he said.You May LikePopularEverythingColorado Mom Adopted Two Children, Months Later She Learned Who They Really ArePopularEverythingUndoLivestlyChip And Joanna’s $18M Mansion Is Perfect, But It’s The Backyard Everyone Is Talking AboutLivestlyUndoModernizeIf Your Home Has Old Roofing, Read ThisModernizeUndo Pensioner dies after crash on Paphos-Polis roadUndoCypriot tycoon launches ‘Bank of Cannabis’UndoThree arrested in connection with hotel theftsUndoby Taboolaby Taboolalast_img

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