Temporary relief in a complex economic climate
In a period marked by strong inflationary pressures and geopolitical uncertainty, the Cyprus support measures announced by the government aim to provide breathing space for households and businesses. However, economist Stelios Platis stresses that their effectiveness must be assessed within a broader and more complex economic environment that leaves little room for simple solutions.
Speaking on the “Protoselido” programme, Platis made clear that any intervention during a crisis is welcome. “There is no doubt that any measures taken in a time of crisis are moving in the right direction,” he said. He also highlighted a noticeable shift in government policy compared to previous years, when there had been reluctance to introduce support measures due to fears of fiscal derailment similar to the 2013 crisis.
“This policy shift is positive,” he noted, adding that adapting to changing conditions reflects realism.
Inflation seen as a lasting challenge
Despite acknowledging the benefits of the measures, Platis underlined a key concern: the nature of the problem itself. Inflation, he argued, is not temporary but cumulative, building up over time.
The aftermath of the pandemic, the war in Ukraine, and the destruction of energy infrastructure have created a new reality in which prices are unlikely to return to pre-crisis levels anytime soon. Even if the war were to end immediately, he explained, it could take months or even years for energy production to stabilise.
Within this context, the Cyprus support measures are seen as offering short-term relief, while the underlying issue appears more structural and long-lasting.
Tourism and connectivity risks
Platis also warned of potential risks to one of Cyprus’ key economic pillars: tourism. A deterioration in the upcoming tourist season, particularly through cancellations, could add further pressure to the economy.
He stressed the need for timely preparation to support the sector, especially as external uncertainties remain high.
Particular emphasis was placed on the issue of air connectivity. The loss of a national carrier was described as a strategic gap, with Cyprus increasingly dependent on indirect flights.
“Cyprus needs direct connections with markets that bring tourism and revenue,” he said, noting that reliance on indirect routes weakens the country’s competitiveness.
A growing social dimension
Beyond macroeconomic indicators, Platis highlighted the social impact of the crisis. “We are not only facing inflation; we are facing a social crisis,” he said.
He described a contradiction within the economy: while fiscal surpluses and credit upgrades paint a positive picture, many citizens are struggling to meet basic needs. The middle class, in particular, is shrinking under the weight of rising costs.
“We are living a paradox. We have surpluses and upgrades, yet many people cannot make it through the month,” he added.
Calls for targeted policies and reform
According to Platis, the measures introduced are largely horizontal and do not sufficiently target the most vulnerable groups. Inflation disproportionately affects lower-income households, as essential goods make up a larger share of their spending.
“The rich and the poor buy the same bread, but they do not pay for it in the same way relative to their income,” he explained.
He raised the issue of wealth redistribution and the need for more targeted policies. The state, he argued, has resources- partly generated by inflation itself- which could be used to provide more meaningful support to vulnerable groups.
He also called for tax reforms, stronger action against tax evasion, and the long-term strengthening of social policies.
A need for economic restructuring
Platis concluded by emphasising that the economy is constantly evolving and policies must adapt accordingly.
“We cannot address today’s problems with the terms of another era,” he said, stressing the need for a comprehensive restructuring of the economic model, with society at its core.
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