Former leader of the Democratic Rally (DISY) party, Averof Neofytou, has issued a warning to the government, urging preparations for the eventual impact of global trade tariffs on the Cypriot economy.
In a statement released on Thursday, Neofytou cautioned that the Cypriot economy would inevitably be affected by the global economic “war” initiated by Donald Trump, stressing the need for Cyprus to prepare.
Neofytou’s statement also drew parallels with the 2008 financial crisis, noting that warnings at the time about the impact of the US banking crisis on the small Cypriot economy were initially met with a “pleasant-sounding” political approach that the crisis would pass Cyprus by unscathed. “We all experienced the results of this stance in a harsh way,” he stated.
Concluding his remarks, Neofytou called on President Christodoulides, who is currently in the United States seeking investment, to be “equipped with an awareness of the criticality of the situation, as well as with realistic aims and expectations” given the current global economic climate.
The full statement reads:
“Yesterday, a global economic war was declared. Our economy, although comparatively very small, will inevitably be affected, even if with some time delay. We must prepare as best as possible and make the most of the time that will pass before the impact reaches Cyprus.
The best-case scenario with the new data we have today for the global economy would be for the tariffs to function as a tool for renegotiating the US trade agreements with the rest of the world. In this scenario, the duration of the crisis will be limited, but it will still have significant global repercussions.
The worst-case scenario is a complete lack of willingness for dialogue between the major economies, resulting in the global economy entering an endless war of tariffs and counter-tariffs, leading to a never-ending vicious cycle. This will result in increased inflation and will sink national economies, and inevitably the global one, into recession.
At the heart of these developments is the belief of the new American government that this is how it will repatriate American investments in order to boost domestic production. Additionally, Washington believes that imposing tariffs will reduce imports and thus balance the US current account balance with the European Union, China, Canada, and other countries, which is currently negative.
In 2008, when the banking crisis began in the US, we warned that our small economy would not remain unaffected. At that time, the initially prevailing (pleasant-sounding) political approach was that the crisis would pass us by and leave us unharmed. We all experienced the results of this stance in a harsh way.
I sincerely hope that the lessons of the past have been learned.
P.S. President Christodoulides, unfortunately, the timing is absolutely negative for missions of this nature. I hope that on your trip to the United States you are equipped with an awareness of the criticality of the situation, as well as with realistic aims and expectations.”
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