Cyprus Showing Signs of Growth? Implementing Reforms Vincenzo - - PowerPoint PPT Presentation

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Cyprus Showing Signs of Growth? Implementing Reforms Vincenzo - - PowerPoint PPT Presentation

Nov 23, 2022 1.03k likes •1.14k views

Cyprus Showing Signs of Growth? Implementing Reforms Vincenzo Guzzo Resident Representative in Cyprus Growth momentum is significant Deviation from Pre-Crisis Level and Trend Cyprus: GDP ( billion) (Percent) 18 0 0 16 -10 -20 14

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Cyprus – Showing Signs of Growth? Implementing Reforms

Vincenzo Guzzo Resident Representative in Cyprus

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Growth momentum is significant

Source: IMF staff estimates Note: data are percentage differences of IMF World Economic Outlook estimates for 2016 from pre-crisis levels and trends. Levels are 2007 data. Trends are linear regression trends fitted using data for 1996-2005. 10 12 14 16 18 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021

Cyprus: GDP (€ billion)

Actual Estimate Source: CySTAT, IMF staff estimates

  • 80
  • 60
  • 40
  • 20
  • 40
  • 30
  • 20
  • 10

Spain Cyprus Portugal Italy Greece

Deviation from Pre-Crisis Level and Trend (Percent)

Deviation from Level Deviation from Trend (rhs)

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Jobs are being created

Source: Eurostat, IMF staff estimates 4 8 12 16 20 200 250 300 350 400 450 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Q2

Cyprus: Labor Force (thousands) and Unemployment Rate (Percent of Labor Force)

Employment Unemployment Unemployment Rate (rhs) Source: CySTAT

6 12 18 24 30

  • 3
  • 2
  • 1

1 2 Cyprus Spain Slovak Rep. Greece Portugal Slovenia Netherlands Ireland Finland Latvia Lithuania Malta Germany Luxembourg France Italy Belgium Austria Estonia

Unemployment Rate (Percent of Labor Force)

Change from a year earlier (lhs) Latest Peak (2008-2016)

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Demographics are not favorable

  • 1.5
  • 1.0
  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 Luxembourg Cyprus Ireland Spain Belgium Malta France Italy Austria Finland Netherlands Slovenia Slovak Rep. Germany Portugal Greece Estonia Latvia Lithuania

Population Growth (Percent)

1995-2004 2005-15 2016-21

0.0 0.5 1.0 1.5

Cyprus

10 11 12 13 14 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Q2

Cyprus: Share of Workers Aged 55-64 (Percent of Labor Force)

Source: CySTAT Source: IMF staff estimates

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Productivity is weak

  • 2

2 4 Cyprus Greece Italy Portugal Spain Cyprus Greece Italy Portugal Spain Cyprus Greece Italy Portugal Spain 1996-2005 2005-2015 2016-2017

Employment and Labor Productivity (Percent Change)

Employment Labor Productivity 8 12 16 20 24 28 32 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Investment (Percent of GDP)

Cyprus Greece Italy Portugal Spain

Source: IMF staff estimates Source: IMF staff estimates

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Policy priorities for Cyprus

i. Repair bank balance sheets addressing NPLs and strengthening operational efficiency to support new lending ii. Commit to credible medium-term fiscal consolidation to generate space for productive public investment

  • iii. Eliminate product and labor market distortions to ensure

efficient allocation of factors of production

  • iv. Promote policies that encourage investment in R&D and

foster innovation to sustain long-term potential growth

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Cyprus – Showing Signs of Growth? Implementing Reforms Thank you