CySEC toughens oversight on cross-border activities
CySEC is increasing supervision of high and medium high-risk firms involved in distributing complex financial products, focusing on their cross-border operations.
resilience
Finance Ministry welcomes review results, reaffirms commitment to economic stability
– The European Commission’s recent in-depth review highlighted that Cyprus’ economy is on a healthy trajectory, with GDP expected to grow and inflation to decrease.
– The moderation in GDP growth in 2023 was primarily attributed to weaker external demand for financial and business services influenced by Russia’s invasion of Ukraine.
– The government is focused on implementing policies to correct imbalances and enhance the competitiveness of the Cypriot economy, with emphasis on green and digital transitions.
– The Cyprus Recovery and Resilience Plan includes significant reforms to reduce macroeconomic vulnerabilities and expand the productive base of the economy.
– Public and private debt have decreased and are expected to continue decreasing in the coming years.
– Non-performing loans in the banking sector have declined, and the possibility of new non-performing loans is viewed as remote.
– Cyprus’ integration with both EU and non-EU economies makes it vulnerable to risks from geopolitical and trade tensions.
European commission highlights Cyprus’s economic growth
The European Commission’s report on the Cypriot economy highlights the observed economic growth, reduction in inflation, and ongoing correction of macroeconomic imbalances. The report identifies macroeconomic imbalances in public, private, and external debt, with improvements seen in the net international investment position and decreasing levels of public and private debt. The review also emphasizes Cyprus’ vulnerability to geopolitical developments due to its trade ties with European and third-country economies. The EC forecasts a growth rate of 2.4% for 2023, increasing to around 3% in 2024 and 2025, with a reduction in inflation and unemployment expected. The Ministry of Finance welcomes the results of the review, noting the government’s efforts to correct imbalances and strengthen the competitiveness of the Cypriot economy through policies focused on green and digital transition. The Cypriot Recovery and Resilience Plan includes reforms aimed at reducing vulnerabilities and ensuring macroeconomic stability and public finance sustainability.
Unveiling Cyprus, ’s wine industry: Challenges and solutions
Cyprus has a long history in the wine industry, with local vineyards producing a wide range of wines. However, the industry faces challenges such as small market size, economic volatility, climate change, regulatory compliance, and distribution issues. Online wine stores offer opportunities for wineries to reach a wider customer base, reduce dependency on traditional distribution networks, increase profit margins, and gather data-driven insights into consumer behavior. Online sales also provide a steady income during non-peak periods and help wineries establish a stronger presence in the global wine market.
Childcare expansion for working families
Deputy Minister of Social Welfare, Marilena Evangelou, announced the creation and expansion of 30 childcare centers with subsidized fees and afternoon hours to help reconcile professional and family life. The Deputy Ministry has received 366,000 calls within a 10-month period since the launch of the 1450 helpline. The waiting time for social welfare applications has been reduced by 74%, now taking 90 days compared to 12-24 months previously. Verification processes have been increased to detect system fraud, resulting in 364 terminations and an annual saving of €3.1 million. The Deputy Ministry is also focusing on digitization and simplification of procedures and services, including an online application for the Guaranteed Minimum Income (GMI) and a citizen helpline. Additionally, the Ministry is expanding subsidy plans for childcare and meals for children up to 4.5 years old, with a cost of €16 million per year. A 5% increase in Child Allowance has also been implemented, benefiting approximately 60,000 families.
Larnaca is becoming an emerging investment hub
Limassol is losing its position as Cyprus’ top investment hub to Larnaca, according to the ‘Cyprus Real Estate Market Report for the 2nd Semester 2023’ by Danos & Associates. Commercial properties in Cyprus are increasingly being used for professional purposes and workspaces, with potential disadvantages such as damages and malfunctioning spaces. However, the value of commercial properties tends to increase at a faster rate than residential properties. Demand for office spaces in Limassol has increased, with the average office value rising by 42% from 2015 to 2019. The real estate sector contributes significantly to the Cypriot economy, with a total of 5,974 transactions amounting to €1.52 billion in property sales in the second quarter of 2023. Nicosia and Famagusta provinces saw an increase in property value, while Limassol experienced a significant decrease. The abolition of the citizenship by investment program did not affect the real estate market in Cyprus, which continues to grow due to strong domestic demand and returning foreign investors.
Cyprus economy on healthy trajectory, European Commission says
The European Commission released a report on Cyprus’ economy, noting that GDP is expected to grow and inflation to decrease. The report also highlighted risks related to interconnections with economies within and outside the EU, as well as vulnerabilities related to debt. The GDP growth rate in 2023 was 2.4%, down from 5.1% in 2022, with expectations of rebounding growth in 2024 and 2025. The Cypriot labor market remains robust, with employment rising and unemployment expected to fall. The country’s fiscal position is strong, with a surplus expected to be maintained. Cyprus’ high integration with EU and non-EU economies makes it susceptible to economic developments in those regions, posing risks to its economy.
Island states, ’ requirements must be noted in EU 2040 climate goals, says minister
Agriculture Minister Maria Panayiotou emphasized the importance of considering the individual circumstances of member states when working towards EU climate goals.
Editorial. Interesting shift in tax contribution
Direct tax revenue is growing at a healthy rate, with net direct tax collection at ₹18.9-lakh crore, a 20% increase compared to the previous year. Personal income tax is driving this growth, with a 23% increase, while corporate tax collections have only grown by 12%. The tax base is not increasing at the same rate as tax collections, with the number of individuals filing tax returns growing at a slower pace. Since FY21, revenue from personal income tax has been higher than that from corporate tax.
Resistance to reforms in EU must be dealt with
The main challenges facing the EU include sluggish growth, low investment levels, slow technology adaptation, tight labour markets, and over-reliance on conventional energy sources, leading to inflationary pressures and a lack of consensus on fiscal policy direction. Cyprus has satisfactory short- and medium-term economic performance but faces long-term challenges like low productivity, investment, chronic balance of payments deficits, and delays in green and digital transitions. The EU and Cyprus need to accelerate reforms and increase investments, supported by the Resilience and Recovery Fund. The European Commission is assessing the effectiveness of national resilience and recovery programs, with preliminary results showing significant fund absorption but underachievement in reform objectives, partly due to resistance to structural reforms and transitions. Immigration, under the right conditions, is seen as necessary for addressing labour shortages but has led to societal challenges and the rise of populist movements. Other factors contributing to reform resistance include the time it takes for reforms to show results and the sense of insecurity radical changes can cause. Recommended policy approaches include designing comprehensive policies, focusing on transparency and communication, and taking compensatory measures to support vulnerable populations. The EU’s fiscal policy framework needs adaptation to current circumstances to ensure reform success.