Cyprus gov’t defends economic policy

Cyprus’ Finance Ministry fended off accusations fired by the opposition that government policy has taken its toll on the economy.

“The Cypriot economy continues its upward trend and, unlike other European countries which are entering a recession, Cyprus recorded the second highest GDP growth rate in the eurozone, after Spain, during the first half of the year,” the ministry said.

Through the Finance Ministry statement, the government responded to criticism from the main opposition party, DISY, and former finance chief Constantinos Petrides, following a slowdown of the economy recorded in the second quarter.

Cyprus’ gross domestic product grew by 2.1% compared to the same period last year. Initial forecasts by the ministry had predicted 2.8% growth for 2023.

According to the Finance Ministry, “the slowdown in the growth rate of the economy was predictable and had started from the first quarter of 2022.

“This is due to external factors such as the impact of continuous interest rate hikes by the ECB, high prices of consumer goods and the impact on the service sector of the Cypriot economy from the implementation of sanctions against Russian entities.”

It argued that slower growth for 2023 had been predicted and is reflected in the ministry’s latest forecasts, where it is estimated that GDP will be limited to a little below 2.8%.

Earlier in the week, former finance minister Petrides took to social platform ‘X’ to fire at the government’s fiscal policies.

“Cyprus is one of the few countries experiencing a contraction in GDP compared to the previous quarter (the third worst performance),” he wrote in a post. [Financial Mirror]