Sapienta Cyprus Teaser, 31 Jan 2023
Shorter Executive Summary of the latest Sapienta Country Analysis Cyprus
Welcome to Sapienta Cyprus Teaser, a sub-series of Sapienta Cyprus Snippets. Below is the shortened executive summary from my latest monthly Sapienta Country Analysis Cyprus: unrivalled independent analysis on all things Cyprus. Learn more about other features of Sapienta Cyprus Snippets here.
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SHORTENED EXECUTIVE SUMMARY 31 JANUARY 2023
POLITICAL ANALYSIS AND OUTLOOK. The leading presidential candidate, Nicos Christodoulides, has not yet revealed his hand on cabinet positions. Post-election relations with the EU and US may not be as abrasive as has been assumed.
ENERGY AND STRUCTURAL REFORMS. There is talk of fast production of natural gas reserves in Block 6. The electricity grid needs an urgent upgrade. A revamped Supreme Court system will start in July.
FISCAL PERFORMANCE AND FORECAST. The next finance minister will face upward pressure on spending. We are not as pessimistic as the Fiscal Council about public finances. Cyprus is preparing to issue a sustainability (“green”) bond.
BANKING SECTOR. Bad loan institutions are gearing up for foreclosures from February. Demand for new housing loans continues to weaken. Banks will find it difficult to contain recurring staff costs.
MACROECONOMIC TRENDS AND FORECAST. Property sales have begun to slow and indicators of local demand point to a slowdown. We continue to forecast real GDP growth of 3.5% in 2023 and 2.4% in 2024.
ECONOMY OF NORTHERN CYPRUS*. Inflation reached 99.7% in 2022. An undersea electricity cable is back on the agenda. The revamped airport will have a capacity of 10 million passengers.
*Areas not under the effective control of the government of the Republic of Cyprus.