By a Staff Reporter
CYPRUS’ economy would suffer a major impact from a possible war in Iraq, Finance Minister Marcos Kyprianou told the House Finance Committee yesterday.
The committee convened to discuss the current state of the economy and its outlook in the event of another war in the Persian Gulf.
Kyprianou warned that the island’s already sluggish economy, heavily dependent on tourism, might not meet the Maastricht criteria if the war was drawn-out.
He described as “alarming” the fact that in the year 2002 the public deficit reached 3.5 per cent of GDP, while the national debt rose to 57.65 per cent of GDP.
The rate of inflation could shoot up to five per cent in 2003, mostly due to the expected rise in oil prices, although structural inflation would remain at two per cent.
The Finance Ministry’s predictions for this year painted a grim picture; the economy would grow at a rate of 2-2.5 per cent instead of the initial 4 per cent forecast, with unemployment reaching 3.5 per cent instead of 3.1 per cent.
Kyprianou explained that a war in Iraq would compound Cyprus’ existing economic problems as a result of the global slow-down, rising oil prices and a general tightening of consumer spending. More and more tourists were seeking less expensive destinations in the Mediterranean, said Kyprianou.
Moreover, any negative consequences on the EU’s economy would also impact Cyprus; for example, the rising price of the euro compared to sterling would adversely affect Cypriot exports and the inflow of tourists.
According to Kyprianou, the Finance and Commerce ministries are working out alternative ways of counteracting the negative consequences of an Iraq war, depending on whether it is brief or drawn out.
The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.
