ALL COUNTRIES are now bracing themselves for the negative economic consequences of the coronavirus pandemic. A slowdown of the global economy is a certainty, the only thing nobody can predict is the extent. To help member states cope with the economic fallout of the coronavirus, the European Commission on Friday announced that governments can give state assistance to companies and that they could exceed fiscal targets temporarily.
The Competition Commissioner said a guide would be prepared to enable governments to give state aid quickly. This is an indication of the deep concern of the Commission whose president Ursula von der Leyen said €37 billion from the EU budget would be allocated for support of countries’ healthcare, businesses and households. This might have to be revised upwards in a few weeks if the virus keeps spreading wreaking havoc to businesses.
The Cyprus government is also looking at ways of countering the inevitable negative repercussions, although finance minister Constantinos Petrides said there was no doubt there would be “a substantial fiscal cost and the growth rate would be affected.” Petrides has had meetings with business representatives and political parties to discuss to the putting together of a stimulus package for the economy that would help keep businesses afloat and protect jobs. He has been discussing subsidies, tax breaks and grants as a way of making the consequences of the crisis “as painless as possible.”
We fear that this is easier said than done and it is not only the tourism industry that will be hit by the crisis. All businesses will be affected as demand is already on a downward path. People are afraid to go out which means restaurants, bars, cafes and clubs will see their revenue shrink; there will also be less spending because of fears of job losses and/or pay cuts and this is before we factor in the collapse of the tourism market. Industry representatives have said tourism was “facing the worst crisis ever, with Easter bookings at zero.” During the recession of 2013-’15 tourism was the only sector that did not suffer, giving a much-needed boost to demand.
That we would not be able to rely on tourism is a major concern and adds to the uncertainty. The stimulus package being prepared by the finance ministry could counter some of the consequences of the economic crisis that is unavoidable. But how many businesses and jobs can be protected by state assistance, given that the consequences of the spread of the coronavirus will leave no part of the economy untouched? The only hope for the economy is that its spread will be brought under control in the not very distant future.