Sapienta Cyprus Teaser, 31 Oct 2022
Shorter Executive Summary 31 October 2022
Welcome to Sapienta Cyprus Snippets. Below is the shortened executive summary from my monthly Sapienta Country Analysis Cyprus: unrivalled independent analysis on all things Cyprus. I shall add more features to this free-for-now service going forward. Learn more about other features of Sapienta Cyprus Snippets here.
POLITICAL ANALYSIS AND OUTLOOK. The UN Peacekeeping Force in Cyprus is facing an unprecedented crisis, with attempts to oust it coming from both sides. Policy-making after the February 2023 presidential election will be complicated.
SECTORAL POLICIES, REFORMS AND ENERGY. The Lebanon–Israel gas agreement could open up opportunities for Cyprus. Reports about Exxon seem to have been misinterpreted. Electricity liberalization is inching forward.
FISCAL PERFORMANCE AND FORECAST. Monthly government revenue growth dropped to single digits in August. The government faces financing needs of €4.1bn in 2023-25. We have revised up our budget forecast for 2022-24.
BANKING SECTOR. RCB has completed its orderly transition without losses for depositors. Hellenic Bank’s CEO has been suspended. The non-implementation of foreclosures remains an ongoing issue.
MACROECONOMIC TRENDS AND FORECAST. Tourism reached almost 80% of 2019 levels in the third quarter. Property sales have remained buoyant ahead of VAT changes. We may raise our real GDP growth forecast in the November issue.
ECONOMY OF NORTHERN CYPRUS*. Data show the economy rebounded only partially in 2021 but incomes shrank in real terms. Export data point to small pockets of competitiveness. There are no signs as yet of direct flights.
*Areas not under the effective control of the government of the Republic of Cyprus.