21/07/2011 06:58
According to the estimates of Credit Suisse, the economic impact from the explosion at the Evangelos Florakis naval base stands at €2.4 billion or 13.8% of the domestic GDP.
In its report for the situation in Cyprus, CSE said that whilst very hard to quantify at present, this will inevitably have negative consequences on the domestic economy.
The cost for the reconstruction of Vassiliko power plant is expected to reach €1.5 billion or 8.6%. With the insurance coverage, the cost is reduced to €900 million or 5.2% of GDP.
“Reliability of supply is also likely to affect businesses negatively, leading to higher losses and hence higher provisions charges at the banks”.
“And the indirect impact of rationing e.g. traffic light failures causing traffic problems, water supplies rationed as the country’s desalination plant has been switched off will also have an effect”.
“In addition there will be a negative impact from the increased price of electricity both due to the imbalance of supply and demand and as the power station was the cheapest cost producer in the country: remaining capacity is more expensive”, it added.
It is estimated that the cost from the increased price of electricity will reach €660 million or 3.8% of GDP.
The losses for tourism have been estimated at €200 million or 1.1% of GDP. CSE supports that the rolling blackouts affect hotels too.
In its report, CS noted that bond yields have risen over the last few days, both in response to the current crisis in Greece.
“Reported debt to GDP is currently a relatively low 62%. An additional 100bp borrowing costs and 15pp of debt to GDP at 8% would increase the annual deficit by 1.8pp”, it stressed.
CS does not cite the data for the basic assumptions that the calculation of the impacts in each category was based on.
In its report for the situation in Cyprus, CSE said that whilst very hard to quantify at present, this will inevitably have negative consequences on the domestic economy.
The cost for the reconstruction of Vassiliko power plant is expected to reach €1.5 billion or 8.6%. With the insurance coverage, the cost is reduced to €900 million or 5.2% of GDP.
“Reliability of supply is also likely to affect businesses negatively, leading to higher losses and hence higher provisions charges at the banks”.
“And the indirect impact of rationing e.g. traffic light failures causing traffic problems, water supplies rationed as the country’s desalination plant has been switched off will also have an effect”.
“In addition there will be a negative impact from the increased price of electricity both due to the imbalance of supply and demand and as the power station was the cheapest cost producer in the country: remaining capacity is more expensive”, it added.
It is estimated that the cost from the increased price of electricity will reach €660 million or 3.8% of GDP.
The losses for tourism have been estimated at €200 million or 1.1% of GDP. CSE supports that the rolling blackouts affect hotels too.
In its report, CS noted that bond yields have risen over the last few days, both in response to the current crisis in Greece.
“Reported debt to GDP is currently a relatively low 62%. An additional 100bp borrowing costs and 15pp of debt to GDP at 8% would increase the annual deficit by 1.8pp”, it stressed.
CS does not cite the data for the basic assumptions that the calculation of the impacts in each category was based on.
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