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In an insightful article featured in Economy Today, Finance Minister Makis Keravnos takes stock of the departing year and outlines the key economic objectives set by the Government for 2024.
Keravnos underscores the imperative of determination and courage in implementing measures and reforms beneficial to the nation, irrespective of potential political or other costs. He acknowledges the critical juncture characterized by geopolitical challenges, global uncertainty, and unprecedented international realignments, emphasizing the need for robust strategies to navigate multifaceted crises.
Against this backdrop, the Finance Minister highlights the resilience of the Cypriot economy despite the challenges and uncertainties. Notably, in 2023, the economy exhibited considerable resilience, surpassing the Eurozone average growth rate at 2.4% compared to 0.6%. Additionally, inflation saw a significant de-escalation to 4.1% from 8.1% in 2022, and public finances remained in surplus at 2.5% of GDP. The public debt is projected to decrease by 6.4 percentage points to 81.8%.
The positive economic indicators have been acknowledged by credit rating agencies, with Moody's recently granting a double upgrade, placing Cyprus in the investment grade of all agencies, bringing potential benefits to the economy.
Looking ahead to 2024, Keravnos outlines a positive but uncertain outlook for the Cypriot economy. Under the baseline macroeconomic scenario, the growth rate is forecasted at 2.9%, well above the EU average of 1.4%, while inflation is expected to be limited to 2.5%, and the unemployment rate is projected to decrease further to 5.8%.
Fiscally, the General Government is anticipated to maintain a surplus, reaching 2.8% of GDP in 2024, and the public debt is expected to be limited to 74.7% of GDP, showcasing a significant reduction compared to 2020.
The Finance Minister emphasizes the government's commitment to supporting the middle class and improving citizens' everyday lives, outlining a governance model with a strong social and developmental character. This commitment aligns with European obligations regarding fiscal rules, particularly aiming to reduce the debt ratio to 60% of GDP in the medium term.
The article also highlights the government's focus on reforms, with Vision 2035 and the National Recovery and Resilience Plan driving initiatives such as tax reform, justice reform, and public service reform. The government aims to better integrate education with research and innovation, fostering a link with the labor market and supporting the dual transition to the Green and Digital economy.
Minister Keravnos concludes by emphasizing the necessity of determination and boldness in implementing measures and reforms for the nation's progress and prosperity. Acknowledging Cyprus as a small and open economy influenced by external factors, he calls for constant vigilance in facing challenges and underlines the collective obligation to secure a better tomorrow based on lessons learned from the past.
By fLEXI tEAM