Cyprus’s economy is expected to expand by around 2.9% in 2024 from a forecast 2.4% this year, its finance minister said on Friday, despite facing headwinds in a “fluid” international environment.
The island, the closest European Union member state to the volatile Middle East, is keeping a wary eye on any potential fallout from the war between Israel and Hamas.
“After emerging from a health crisis with its lingering effects we are now in the midst of serious geopolitical developments which create a very fluid environment internationally,” Finance Minister Makis Keravnos told parliament, referring to both the war in Ukraine and in the region.
Those forecasts were higher than the EU average, he said.
A services-based economy, Cyprus lost its second-largest tourism market when Russia invaded Ukraine in early 2022 and the island followed its EU partners with sanctions against Moscow.
But its tourism sector quickly recovered, with central European markets filling the void. Arrivals were up 21 percent year-on-year until Oct. 2023, based on the latest available data.
Keravnos said the primary surplus, which excludes debt interest repayments, was forecast to reach 4.3% of output next year, compared to 3.9% in 2023.
Cyprus required an international bailout in 2013 after fiscal slippage and heavy exposure to the Greek debt crisis. Public debt was expected to fall to 74.7% of GDP next year, from 81.8% in 2023, the Cypriot minister said.
His address to parliament heralds a three-day debate in the legislature where MPs will be called to approve or reject the budget.
(Reuters)