The outcome of the July 23rd British referendum – exit from the European Union – is not expected to negatively affect the economies of South-eastern Europe that we follow. At this point, the direct implications for these countries are linked with the whole of the European Union, while we will be able to quantify the results once the two sides conclude an agreement on the terms and conditions of the Brexit. SEE markets and local currencies reacted calmly, constraining the volatility. Cyprus, though, is an exception to the above, as the country has stronger trade ties with the United Kingdom than the rest of the countries we follow. Tourism investments and the presence of Cypriot citizens in the U.K. are some of the sectors that are expected to be negatively affected by the referendum outcome. Indicatively, the Cyprus General Index and the 5Yr CDS decreased on June 24th, signalling the ongoing uncertainty.
Group Chief Economist