An economy of growth and high potential

For a while now, and particularly in recent years, the international economic environment has indisputably been filled with adversities and challenges, including wars and other unpredictable crises that have suffocated the global economy and led to strong uncertainty.

Inevitably and as was to be expected, the side effects from this situation are being felt within the world’s societies, with citizens having to deal with the pressure from perpetual price increases and the high cost of living.

This, naturally, has increased the sense of frustration and discomfort among the population masses, who are also being consumed by pessimism and disappointment.

A “cup half empty” and miserly mentality

This more or less describes the current feeling in Cyprus. However, if one was to look at the bigger picture – and not with a “cup half empty” and miserly mentality – one would realise that this is actually far from a reflection of the truth.

Are there problems? Of course there are. Are there fellow citizens who are unable to make ends meet and pay their bills? Of course there are. But is everything bad and bleak with no hope or prospects? Of course it is not.

Because, despite efforts to underestimate and undermine this, the Cyprus economy has managed despite the adversities to be standing on its own two feet, on solid foundations and ranking among the best in the EU in terms of its economy’s performance.

Some could come out with the tired old saying: “numbers live better than people”; but this is an extremely superficial and populist approach. The fact that the state’s policies have improved the numbers has helped it support the public with millions of euros’ worth of measures to ensure people don’t go hungry and make sure we avoid going back to the days of social groceries and food coupons.

It’s not all doom and gloom in Cyprus, as some are trying to convince a society made vulnerable from these difficult conditions; to the contrary, the economy is on the right track and there is indeed both hope and potential.

And this is not just an off-hand statement, but backed by facts and figures that show the true picture.

Growth, upgrades and tapping the markets

In the first quarter of 2024, Cyprus had the highest growth acceleration in the EU, with a rate of 3.5% when the EU average was just 0.4%.

At the same time, for 2024 and 2025, economic growth is forecasted to increase further compared with 2023, unemployment is expected to continue to decline and inflation to carry on decelerating; all while the public debt has been steadily dropping with the aim of bringing it under 60% of GDP by 2026.

In addition to this, Cyprus has received five upgrades by international rating agencies in the space of just over a year – the most recent by Fitch and Standard & Poor’s. The latter estimated that growth will accelerate again to 3.0% over 2024-2027 and highlighted how economic activity in Cyprus has become increasingly diverse in recent years, opening up opportunities.

Fitch, meanwhile, spoke of a strong fiscal performance and reduced banking risk, stressing how the Cyprus economy has shown continuing resilience in 2023, growing by 2.5% despite the challenges. It also foresees a positive outlook from the absorption of funds linked to the Recovery and Resilience Plan, which will help boost overall growth this year to 3%.

Moreover, just last week, the Republic of Cyprus issued a seven-year bond worth €1 billion on the international markets. The strong interest from investors translated in a very short time into an offer book of €9.6 billion, oversubscribing the issue more than nine times, in another strong sign of trust by international investors in the Cyprus economy’s resilience and impetus.

If all this is not a strong indication that the Cyprus economy is on the right path, then what is?

A banking sector that inspires confidence and stability

Of course, a healthy and robust economy cannot exist without an equally healthy and robust banking sector.

And here, the reality, for those who choose not to close their eyes and ears, is that our country's financial system, also having faced a series of multiple challenges, has managed to inspire confidence and stability in a period defined by instability. This is validated through the successive upgrades of the island’s main banks.

Having achieved strong profitability after many years, not just because of high interest rates but primarily because the Cypriot banks completely overhauled their business models, they now maintain a strong capital position and ample liquidity, proof of our banking system’s financial health. And this is reflected in their profitability ratios.

Furthermore, another important parameter – perhaps even more so given the general financial environment – is the fact that at a time when interest rates were high, the Cypriot banking sector continued to show remarkable progress in managing its non-performing exposures (NPEs).

Indeed, the NPE ratio dropped further in the first quarter of 2024, to 7.3% from 7.9% at end-2023, fast approaching the Eurozone average.

If this, too, is not an example of how the Cyprus economy is on the right path with plenty of prospects, then what is?

An increasingly attractive investment destination

And then there is the business scene, with Cyprus becoming an increasingly attractive destination for long-term foreign investments.

For example, in the banking sector, the decision by Eurobank, a banking group with Europe-wide reach, to acquire Hellenic Bank in perhaps the biggest investment in cash by a non-Cypriot group in Cyprus, is another vote of confidence in the island and a recognition of its huge potential.

And so is the ongoing investment by Greece’s largest private healthcare provider Hellenic Healthcare Group (HHG) in Cyprus, after it acquired two of the island’s biggest private hospitals – Apollonio and Aretaeio – and recently announced that it will be acquiring a significant stake in the American Medical Center (AMC).

And so is the decision by one of the biggest retail giants in Greece, the Sklavenitis Group, to further enhance its presence on the island by acquiring the Papantoniou Supermarkets chain and adding it to its already existing Cyprus network.

And so is the arrival of a vast number of tech companies on the island, and particularly Limassol, creating countless highly-paid jobs and helping curb unemployment rates dramatically.

The numbers speak for themselves: based on the Statistical Service of Cyprus, the employment rate increased by 2.2% year-on-year in the first quarter of 2024, with the total number of employed people reaching 474,587.

In 2023, the employment rate was close to 79% – its highest since 2009 – and above the EU average of 75%.

And then there are the billions of euros’ worth of new development projects that have either been completed or are in the pipeline across the island. A prime example is Aktaia Street in Limassol; an area that following a series of private investments is expected to become the country’s financial and business hub in the coming years.

In addition to all the above, one of the world’s superpowers – the USA – has decided to elevate the two countries’ bilateral relationship with the establishment of a Strategic Dialogue, opening up huge prospects for the local economy and its commercial ties with America.

If this, too, is not an example of how the Cyprus economy is on the right path with plenty of prospects, then what is?

The numbers that speak for themselves… and the doomsayers

With all the above said, our aim is not to beautify situations or undermine the problems a significant number of fellow citizens are facing, as acknowledged from the very start of this article.

What we wanted to show with the above and prove through numbers and real facts, is that the triptych that President Nikos Christodoulides has repeatedly said defines the government’s economic policy – that is, fiscal responsibility, financial stability, structural reform – is paying off and allowing the economy to grow; which in turn will eventually be felt by those members of the public who are currently struggling.

And that the constant whining by doomsayers who choose to look at the situation as a “half empty glass” and be miserly, are not doing the anybody any favours.

Unless, of course, they are so focused on serving petty political – or other –interests and dedicated to their populist views that they have not yet noticed the actually reality: that the country’s economic prosperity is not an intangible dream for the distant future, or even a thing of the past. It is real, current, tangible and has the receipts and names to prove it.

When we speak of the Cyprus economy today, we speak of an economy that is growing with a very bright future ahead. Just so long as people are open to see it.

(This is a translated version of an article published on InBusinessNews. To view it click here)