Impact of Ukraine crisis on Cyprus economy in focus

The impact of the war in Ukraine on an economy already struggling with rising prices was at the focus of a meeting on Friday between the leaderships of left-wing Akel and of the Cyprus Chamber of Commerce and Industry (Keve).

The meeting, previously scheduled as one of a series Akel is holding with major players in the economy, took place against the backdrop of Russia’s invasion of the Ukraine that has prompted the west to reply with sanctions and sent shockwaves through the world’s economies.

Businesses and consumers, already concerned by surging prices as economies reopen after the pandemic, are bracing for even steeper hikes.

These fears were conveyed by chamber president Christodoulos Angastiniotis who told reporters that developments in the Ukraine were expected to further aggravate the problem.

“We are very concerned about the energy adequacy of Cyprus, a well as adequacy of grains, that will have a huge impact on the economy,” he said.

Cyprus was totally dependent on liquid fuel. “I fear even making a forecast as to how prices will go,” he added.

As regards grains, as Cyprus imports 95 per cent of its needs, a shortage would affect the food chain, with knock on effects on prices.

As regards the possible impact of the war on tourism, he said this was the fourth summer that loomed with unfavourable prospects but said “we will solder on”.

Keve will be holding meetings with the government next week to propose measures so that the economy can operate as smoothly as possible.

“Rising prices must be contained to the extent that it can because it affects consumers,” he said.

In an announcement issued after the meeting, Keve said that the meeting with Akel had evaluated the chain reaction of the Ukraine crisis on the economy. Also discussed were Gesy, with Angastiniotis saying that Keve supports the health scheme but was concerned about management of resources and wanted to see closer monitoring.

Also discussed were labour shortages, local government and public service reform, justice, modernisation of the state machinery, the need to cut red tape, green growth, digital innovation, minimum wages, and tax reform.

Angastiniotis handed Akel’s general secretary a memorandum with 66 points featuring proposals regarding the transparency, fighting corruption and the supervisory framework.

For his part, Stephanou said noted that the economy stood at a crossroads, as he urged a new development model that would ensure the sustainability of the Cyprus economy and produce wealth that would, through the correct redistribution of wealth, support a social state and offer satisfactory standards of living.

The rise in the price of basic goods and basic raw materials such as fuel and grains were affecting the economy and society.

“The issue becomes even more pressing given what is happening now in the Ukraine with the war which will inevitably affect and is already affecting the price of energy and basic raw materials that will further aggravate the problem,” he said.

Discussions should focus on how the economy of Cyprus can grow in this international environment and secondly, against the backdrop of the war in the Ukraine and the sanctions decided by the EU, the impact on Cyprus given its close economic, commercial, tourist and energy links with Russia and the Ukraine.

“The government mut move quickly and in a concerted way and study the repercussions from this situation and take those measures that will enable us to deal with the impact in the best possible way,” he said, adding that Akel was ready to contribute.