European Central Bank (ECB) President Christine Lagarde, during her visit to the island on Wednesday, expressed confidence that Cyprus will recover from the setbacks caused by the coronavirus pandemic and the war in Ukraine.
Lagarde arrived in Cyprus early on Wednesday morning for what the central bank called “particularly important”, inviting the head of the ECB.
Speaking after meeting with President Nikos Anastasiades and the governor of the island’s central bank, Constantinos Herodotou, Lagarde said Cyprus would bounce back, as it has done on a number of occasions.
“Your nation has recovered from the 1974 invasion and subsequent partition of the country, using your dexterity and insight to become the center of business in the Middle East and North Africa region,” Lagarde said.
The head of the ECB added that Cyprus has gone from being an island on the easternmost edge of Europe to becoming a member state in its own right, joining the EU in 2004 and adopting the euro in 2008.
She went on to add that the island survived and then recovered from the devastating banking crisis of 2013, with the economy growing by about 6% every year from 2015 until the start of the pandemic.
Lagarde said that, more recently, “Cyprus has recovered well from the pandemic, despite the importance of tourism to an economy that has been hit hard by lockdowns and travel bans.”
Influence of Ukraine
She then mentioned the Russian invasion of Ukraine and its impact on the island. “We are all shocked and frightened by the pictures of the war, and everyone is doing everything possible to rectify the situation,” she said.The head of the ECB said that “tourism will be affected”, but said on a positive note that Cyprus will be able to recover from the latest shock.
Lagarde noted that Cyprus is experiencing the same price pressure as the rest of the world when it comes to inflation, which rose by 5.8%, mainly due to higher energy and food prices (26.2% and 6.8% respectively).
“I am fully confident that Cyprus, with the help of its partners, with the help of Europe as a whole, like other members of the eurozone, will be able to recover and bounce back and return to prosperity and the path that was previously chosen,” said the head of the ECB.
“In the past, Cyprus has always demonstrated the ability to improve, innovate and move from one level of business to another,” added Lagarde.
For his part, President Nikos Anastasiadis said he was delighted to welcome the President of the European Central Bank and update her on the state of the Cypriot economy.
He noted that the war in Ukraine has placed “Cyprus in front of new obstacles, such as a decrease in the number of tourists, rising inflation and rising energy and food prices, which undermine the country’s growth trajectory.”
Anastasiades expressed optimism “that once again we will be able to exceed expectations and continue to deliver on our commitment to achieving macroeconomic and financial stability and sustainable and inclusive growth for the benefit of our citizens and businesses.”