Focus onCyprus Investment Immigration and the dynamics ofthe Cypriot economy: Despite suffering a severe economic crisis over the past year, with the arrival of the new year, Cypriots remain hopeful about the future.
Due to severe losses in the banking sector, Cyprus had to seek assistance from the European Union and the International Monetary Fund (IMF). In March of last year, the Cypriot government reached an agreement with the Eurogroup and the IMF for a €10 billion bailout, which came with a series of harsh austerity measures that Cyprus had to implement. In 2014, salaries and pensions for government employees will be reduced by 3%; the value-added tax will increase from 18% last year to 19%; and gasoline prices will rise by approximately 3.5%. These austerity measures have affected every individual living in Cyprus to some extent.
Cypriot Finance Minister Harris Georgiades recently stated that Cyprus has avoided the danger of bankruptcy, and the economy is beginning to get back on track.
During the Christmas and New Year period, reporters indeed felt signs that the economy was getting back on track. Compared to previous periods of recession and neglect, there were long lines at the cash registers in major shopping malls, and many products in small supermarkets were sold out due to insufficient supply.
2013 was the most depressed year for the Cypriot economy. According to the bailout agreement reached between the Cypriot government and the Eurogroup, the largest bank in Cyprus had to restructure using the funds of large depositors, which was unprecedented among EU countries, and the second-largest bank in Cyprus was also forced to close.
The banking sector has traditionally been a pillar industry for Cyprus, and the heavy blow to the banking industry has significantly impacted the economy. International rescue organizations predict that Cyprus's economy will shrink by 7.7% this year, 4.8% next year, and will see a slight increase in 2015. However, many Cypriots believe that the most difficult times are behind them.
The tourism industry is another major pillar of the Cypriot economy, following the financial sector, and it is one of the few industries that has not been adversely affected by the economic crisis. Foreign tourists typically visit Cyprus during the summer, yet this winter, Cyprus welcomed hundreds of thousands of Russian tourists. The tourism industry not only meets the government's income needs but also helps reduce unemployment rates.
Many economists believe that given Cyprus's small size and population, economic recovery is relatively easier. The strong performance of the tourism industry and foreign investments have aided Cyprus's economic recovery. As Cypriot President Nicos Anastasiades stated in his New Year's message: “The New Year will mark the beginning of our country's recovery.”