Finance Minister Makis Keravnos on Friday sounded the alarm, describing the current economic situation as alarming. Speaking on CyBC’s morning radio programme, the minister warned that Cyprus’ economy, which heavily depends on services and tourism, is at risk as the European Union grapples with shifting trade dynamics. The minister’s warning comes as the EU faces mounting pressure from global economic shifts, some of which challenge long-established trade norms.

“The European Union was prepared, but no one expected such extreme developments,” Keravnos said.

“It is deeply concerning, as it affects the global economy and undermines the agreed rules of international trade. These are not just theoretical concerns. We are now seeing major uncertainties unravelling before our eyes.”

Keravnos’ comments reflect growing concerns that the international economic order is facing profound changes. Global financial markets have been rocked by recent events, leading to fears that crucial trade agreements, long supported by institutions like the World Trade Organisation (WTO), could unravel. For Cyprus, which relies on EU trading partners, the potential fallout could be severe.

Related Articles

“Right now, we’re witnessing a shift that could have serious consequences on global trade,” Keravnos continued. 

“The rules that have been in place are now being questioned, and this creates an environment of extreme uncertainty.”

The minister’s concern extends beyond Cyprus’ borders. He highlighted that major EU economies, already showing signs of recession, could drag Cyprus into a broader economic downturn. The potential stagnation of key trading partners, particularly large economies like France, could have a direct and significant impact on the island.

“The large economies of the European Union are on the brink of recession, and the ripple effects will certainly be felt here in Cyprus,” Keravnos warned.

Cyprus is especially vulnerable to these shifts. The country’s small, service-oriented economy, heavily reliant on tourism, could see a sharp decline if the broader European economy falters. While some have suggested the island may not immediately feel the full impact, Keravnos remained cautious.

“There are initial reactions suggesting that Cyprus may not immediately feel the full impact, but if the major EU economies, such as France, experience prolonged stagnation, we will see the effects here soon enough,” he said.

Keravnos’ outlook starkly contrasts the optimism that followed Europe’s recovery after the Covid-19 pandemic. As the global economy faces uncertainty, smaller nations like Cyprus are increasingly concerned about how the ripples of instability will affect their futures.

“We must prepare for the worst, even as we hope for the best,” Keravnos said, urging rapid adaptation to the emerging economic challenges.

For Cyprus, this could require a fundamental shift in how the country approaches its economic priorities. The heavy reliance on sectors like tourism may no longer be enough to weather the storm brewing in global markets. The finance minister called for a robust and flexible approach to navigate these uncertain times.

“We need to ensure that we remain resilient in the face of these changes,” Keravnos added. “Adaptability will be key to safeguarding Cyprus’ economic future.”