President Nicos Anastasiades receives the President of the European Central Bank, Christine Lagarde and Cyprus Central Bank Governor Constantinos Herodotou (photo PIO)

ECB chief confident Cyprus will ‘bounce back’

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The President of the European Central Bank (ECB) Christine Lagarde, during her visit to the island on Wednesday, appeared confident that Cyprus would recover from the setbacks of the coronavirus pandemic and the war in Ukraine.

Lagarde arrived in Cyprus early on Wednesday for a visit that was described “of particular importance” by the Central Bank, who had invited ECB’s chief.

Talking after a meeting with President Nicos Anastasiades and the island’s central bank governor, Constantinos Herodotou, Lagarde said that Cyprus would bounce back as it has on a number of occasions.

“Your nation rebounded after the invasion of 1974 and subsequent partition of the country, using its agility and acumen to become a hub for business in the Middle East and North Africa region” said Lagarde.

The ECB chief added that Cyprus transformed itself from an island on Europe’s easternmost edge to a Member State at its core, joining the EU in 2004 and adopting the euro in 2008.

She continued to add that the island had endured and then recovered from a crippling banking crisis in 2013, with the economy growing by around 6% each year from 2015 until the start of the pandemic.

Lagarde said that more recently, “Cyprus has rallied well from the pandemic, despite the importance of tourism to the economy, which was heavily hit by lockdowns and travel bans”.

Ukraine impact

She then referred to Russia’s invasion of Ukraine and its impact on the island.  “We are all shocked and horrified by the images of the war and everybody is doing the best to address the situation,” she said.

ECB’s chief said that “tourism will be affected”, however sounding a positive note saying that Cyprus would be able to recover from the latest shock.

Lagarde noted that Cyprus has seen similar price pressures with the rest of the world, when it comes to inflation, which has risen by 5.8% – driven mainly by higher energy and food prices (26.2% and 6.8%, respectively).

“I have full confidence that Cyprus with the help of its partners, with the help of Europe at large, like other Euro area members, will be able to recover and bounce back and return to the prosperity and the path that was taken previously,” the ECB chief said.

“It has always been the case in the past that Cyprus has demonstrated this ability to improve to innovate and to move from one business level to another,” added Lagarde.

For his part, President Nicos Anastasiades said it was a pleasure to welcome the president of the European Central Bank and to update her on the state of Cyprus’ economy.

He noted that the war in Ukraine has left “Cyprus up against new obstacles, such as reduced tourist arrivals, increased inflation, and rising energy and food prices, all of which undermine the country’s growth trajectory”.

Anastasiades expressed his optimism “that, once again, we will manage to exceed expectations and continue implementing our commitments towards macroeconomic and financial stability and sustainable and inclusive growth, to the benefit of our citizens and businesses”.