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Cyprus Business Now: weekly wrap-up

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Cyprus Business Now: weekly wrap-up

Here are the factual points extracted from the text:

1. The Cyprus Shipping Chamber (CSC) announced that it is marking 35 years of successful operation since its establishment on January 26, 1989.
2. The Cyprus real estate data analytics firm Ask Wire released a report outlining the ten most lucrative property transactions completed in Cyprus during 2023, with a focus on high-value deals in the district of Limassol.
3. The European Central Bank (ECB) kept interest rates unchanged at a record high on January 25 and did not indicate a shift towards policy easing.
4. Wargaming, an online game developer and publisher headquartered in Nicosia, announced opportunities for students and recent graduates in 2024, including six online gaming educational courses.
5. Cyprus’ Deputy Ministry of Tourism sees an opportunity for increasing tourist arrivals from Switzerland, estimating visits to reach 80,000 in 2023, up from 73,000 in 2022, marking a 20 percent increase.
6. The President of the Cyprus Institute, Stavros Malas, presented a proposal for the establishment of a Centre of Excellence for Smart and Sustainable Farming (SMARTFARM).
7. The Economic Sentiment Indicator (ESI) in Cyprus increased by 2.3 units in January 2024 compared to December 2023, primarily due to a stronger business environment in the services sector.
8. TechIsland and Adsterra launched an educational programme called “Advocate For Yourself” under the Women in Tech Cyprus initiative.
9. Mark Rachovides, chairman of Venus Minerals, explained that copper prices are expected to rise by approximately 75 percent over the next two years due to supply disruptions and increased demand.
10. Finance Minister Makis Keravnos and Cyprus Central Bank governor Constantinos Herodotou discussed a potential decrease in ECB interest rates during 2024, with an expectation that rates are likely to fall before the end of the year barring unforeseen events.
11. The Bank of Cyprus returned a total of €2.2 million to up-to-date mortgage borrowers as part of their ongoing reward plan.
12. A €6.6 million project to install solar panels in 405 schools has been completed, resulting in a 30 percent reduction in total energy consumption, and was funded under the national Recovery and Resilience plan.

Interest rate cuts likely to take place in 2024, CBC governor says

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Interest rate cuts likely to take place in 2024, CBC governor says

– Finance Minister Makis Keravnos and Cyprus Central Bank Governor Constantinos Herodotou discussed a potential decrease in interest rates by the European Central Bank during 2024.
– They agreed that interest rates are likely to fall before the end of the year, barring unforeseen events.
– Herodotou mentioned the positive trajectory of the Cypriot economy, which was echoed by Keravnos.
– Inflation in Cyprus was at 8.1% in 2022, peaking at 10.6% in July, then falling to 1.9% in December 2023, with a minimal increase expected in January due to the base effect.
– The positive progress in inflation was attributed to monetary policy and targeted support measures.
– Increased uncertainty exists due to geopolitical developments, including attacks on the Suez Canal and the situation in the Middle East.
– Herodotou indicated that interest rate cuts are expected within 2024, but cautioned against reducing them too soon to avoid a resurgence of inflation.
– The majority of Cypriot consumer products are imported from European countries, but the economy is affected by issues such as cruise ship tourism due to regional instability.
– There has been a decrease in the prices of basic products, including fuel, in Cyprus.
– Despite interest rate hikes, a surge in non-performing loans (NPLs) has not occurred, partly due to measures ensuring banks consider borrowers’ repayment capacity and increased savings.
– A new framework for NPLs has seen a positive response from borrowers and includes a stable foreclosure framework with a safety net.
– Banks and credit acquisition companies have restructured £2.4 billion worth of loans in 2023.
– The CBC, in collaboration with the Ministry of Finance, is working on a plan to help smaller banks reduce their NPL ratios, which is currently in its second phase.

Government needs a new economic agenda

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Government needs a new economic agenda

The trade unions and the Minister of Finance in Cyprus are in disagreement over the automatic wage indexation policy. The government had previously agreed to adjust salaries and pensions of public employees at a cost of 1.2 billion euros, but now the finance ministry is reconsidering this decision due to warnings from the European Commission, the IMF, and the country’s Fiscal Council about the risks to fiscal stability. The unions are trying to reverse reforms that were made as part of the country’s rescue package by the EU, IMF, and ECB. The author suggests that the government should implement policy measures to address fiscal risks and drive growth and competitiveness, such as incentivizing employees to work past retirement age and creating a sovereign fund. Additionally, the author recommends addressing the demographic risk by providing affordable housing to new couples with EU citizenship. It is unclear if the president has the vision and priorities to implement these policies.

ECB,  holds rates at 4%, investors need vigilance

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ECB,  holds rates at 4%, investors need vigilance

The European Central Bank has decided to keep interest rates unchanged at 4% for the third consecutive meeting. The bank is focused on bringing inflation down to 2% and is committed to maintaining interest rates at their current levels for a long duration. Investors are advised to pay attention to the ECB’s messaging and not be swayed by market hype and speculation. The decision to hold interest rates steady is part of a broader global context where central banks are closely monitoring economic indicators and working towards economic stability.

Strong batch of US data, ECB gives little away

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Strong batch of US data, ECB gives little away

The US economy is performing well, with GDP data for the fourth quarter exceeding expectations. The European Central Bank (ECB) has left interest rates on hold at 4% and has not provided clear guidance on when rates will start falling. The euro has drifted lower after the ECB press conference and US data, but it has not broken out of its recent trading range.

European Central Bank leaves interest rates unchanged – No signs of easing

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European Central Bank leaves interest rates unchanged - No signs of easing

The European Central Bank (ECB) has decided to keep its interest rates unchanged, reaffirming its commitment to combat inflation. The main refinancing rate, as well as the marginal lending facility and deposit facility rates, will remain at their current levels. The ECB is not considering a change in its policy at this time, as inflation pressures have not yet fully dissipated and many wage negotiations are still ongoing. Investors believe that the ECB is mistaken in its assessment of economic growth and inflation, and expect the bank to make five interest rate cuts starting in the spring. However, the ECB did not signal such a shift in its statement, stating that keeping interest rates at current levels for a prolonged period of time will help achieve the inflation target of 2%. The ECB also emphasized that it will continue to adjust its policy based on economic data. The President of the ECB will provide further details on the decision during a press conference.

Strong US surveys, cautious BoC, Eurozone struggles

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Strong US surveys, cautious BoC, Eurozone struggles

The US economic data, including the services and manufacturing PMIs, exceeded expectations and indicated that the economy is in good shape. The Bank of Canada is cautious about rate cuts, while the eurozone’s data shows a weak economy that could lead to rate cuts by the ECB. Oil prices are consolidating, gold is holding above ,000, and bitcoin is testing a potential new area of resistance.