“We have succeeded in our policy response to the pandemic crisis,” Finance Minister Constantinos Petrides told an online conference on Tuesday.
“As a result, we are able to revise our forecast for the Cyprus economy’s performance in 2020. We now expect a contraction of 5.5 per cent, revised from the previous forecast of 7 per cent,” the Minister announced.
“Further, we forecast unemployment for the current year to finish at 8 per cent, down from the previous forecast of 9 per cent,” he continued.
The Finance Minister spoke at a summit sponsored by The Economist Events and Hazlis & Rivas, which offered a fairly optimistic view of developments in Eastern Mediterranean economies, as moderator Joan Hoey, of the Economist Intelligence Unit, pointed out.
“Cyprus has made the epidemiological priorities the cornerstone of our policy response,” Petrides explained. “This was a conscious economic policy decision beginning from a way to mitigate the medium- and long-term economic effects of the crisis. We started early with frontloaded economic measures, a generous fiscal stimulus package that provided short-term income support. We understand that it was the most comprehensive package in the EU with 85 measures.”
Petrides noted that there is no magical solution for recovery, but that the forecast is now 4.5-5 per cent growth for 2021, because support measures are working. “The government is fully exploring the opportunities created by the European Recovery Plan and is working on the reforms required for it.”
Much-needed structural reforms currently underway include bureaucratic fast-tracking for businesses, administrative reform, local authority reform and judiciary reform. “The public administration is in the process of digital transformation,” he adds.
“Attracting foreign investment is a priority, and our sound fiscal policies maintained for the past seven to eight years, along with our stable tax system and balanced budget will do much to bring in such investment.” Transparency based on the Cyprus system of common law is another factor, he said.