Larnaca economic revival well underway — regional instability may dampen growth

Larnaca Chamber of Commerce & Industry (Evel) president Stavros Stavrou used his speech at this year’s annual assembly to highlight the city and district of Larnaca’s substantial strides toward economic recovery.

“After decades of stagnation, Larnaca is now firmly on the path to revitalisation,” stated Stavrou.

He placed the spotlight on major ongoing projects, such as the removal of oil tanks and gas facilities, the construction of the Larnaca-Dekelia road, port-marina development, and Phase 3 of the Larnaca-Dekelia road.

Stavrou underscored the transformative developments in the region, labelling them as quite substantial, acknowledging the new risks on political and economic fronts, particularly Cyprus’ proximity to geopolitical crises in neighbouring countries.

Moreover, Stavrou expressed concerns about the 5.9 per cent unemployment rate, urging collaboration among the government, Chamber of Commerce, and other social partners to strategise on resolving the ongoing issue of labour shortages.

Stavrou criticised the delay in implementing infrastructure for the reception of Liquefied Natural Gas (LNG), highlighting the burden of energy costs borne by businesses and consumers over the years.

Cyprus Chamber of Commerce (Keve) vice president Othonas Theodoulou echoed Stavrou’s sentiments, stressing the escalating risks in the Eastern Mediterranean region and the anticipated rise in energy costs, forewarning its impact on inflation, tourism, and investments, especially from Israel.

Despite some positive developments, including the influx of international or local firms based in Israel, Theodoulou emphasised that the conflict in Israel exacerbates Cyprus’ economic uncertainty, indicating less optimistic predictions for the country’s economic trajectory.

He further stated that “based on estimates from the European Union and the government, the growth rate in 2023 is expected to shrink to 2-2.5 per cent of GDP from the 5.2 per cent recorded in 2022”.

“At the same time, inflation, which stood at 3.85 per cent in October 2023, may increase due to the crisis in Israel,” he added.

He continued by saying that “unemployment, currently around 6 per cent, is expected to rise in the coming winter months due to the end of the tourist season”.

Regarding public finances, the Keve vice president mentioned that “new needs for state support to the people will arise, beyond the €196 million recently announced by the government”.

Furthermore, he expressed concerns about the business environment operating in an uncertain economic context and suggested that “Keve proposes the government take the initiative for a broader discussion on economic matters”.

In his address, Theodoulou also referred to Larnaca specifically, indicating its potential impact from the worsening economic climate.

“Despite the significant growth the city has experienced in tourism, real estate, investments, and increased interest from foreigners to invest in the district, ominous signs are gathering on the horizon,” he said.

He reiterated Keve’s commitment to support projects, infrastructure improvements, tourism enhancement, and major developments along the coastal front in Larnaca, aiming to elevate the city and create new opportunities for growth.

Meanwhile, Larnaca mayor Andreas Vyras spoke about the enduring, excellent, and effective collaboration between the Larnaca Municipality, Keve, and the regional board of tourism (Etap), resolving city issues and laying the groundwork for new development projects, making Larnaca an attractive destination for investments and fostering the business environment.

“Over the last 7 years, we’ve been working towards a new image for Larnaca, and we’ll continue to do so in the coming years, aiming to make our city prosperous for everyone,” the mayor said.

He noted the achievement of a unified voice in positions and claims on significant city matters, such as the relocation of oil and gas facilities from Larnaca’s coastal front, unified port and marina development, blue economy growth, significant infrastructure projects, intense tourism growth, and efforts to attract investors as fundamental parameters for achieving their goals.

Finally, the mayor described as “commendable the efforts made by the private sector of Larnaca and other organised bodies of the city”.