Cyprus needs a new strategy but what are the implications?

English: Various Euro bills.

English: Various Euro bills. (Photo credit: Wikipedia)

Map of Cyprus with EU flag

Map of Cyprus with EU flag (Photo credit: Wikipedia)

When the dust settles on the economic outlook for Cyprus, following this weekend’s deal with the troika, surely Cyprus will need a new strategy?

With Cyprus’ financial industry discredited, Cyprus urgently needs a new engine for growth. Short-term, the economy is likely to contract, at least ten percent over the next twelve months, but what about the outlook beyond?

It is probably too early to start to project cash-flow from the estimated Euro 80 Billion offshore gas and oil reserves, especially with Turkey disputing the title. Further, Russian inward investment must now be in question. The troika of the EU, ECB and the IMF do not appear to be interested in generating investment in Cyprus; indeed, the IMF seems pre-occupied with technical cash-flow projections on its loans.

The Cyprus tourist industry suffers from the high cost of labor, like Italy, because of Euro labor costs, and is not competitive with non-EU members, like Turkey, or further afield like Thailand.

In my view, Cyprus urgently needs a comprehensive industry analysis of its major business sectors ( including the Public Sector), focusing on:

  • Competitive position
  • Strengths/weaknesses, opportunities, threats (SWOT analysis)
  • Investment opportunities
  • Risk analysis & mitigation opportunities

Ultimately, perhaps a controlled exit of Cyprus from the Euro might still be the best option, and of-course, a controlled exit for Cyprus would probably make sense for other Euro casualties, like Greece, Italy, Spain, Portugal and perhaps even France?

Could Cyprus still be the trigger point for the breakup of the Euro?

What do you think?

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4 responses

  1. Pingback: Sino-German strategic relations and investment in Cyprus offshore gas and oil? – John Gelmini « Dr Alf's Blog

  2. Pingback: Cyprus: As the Financial Dust Settles, Talk of Reciprocity and Whispers of Retribution — State of Globe

  3. Pingback: How to Help Cyprus Help Itself – Lenos Trigeorgis – Harvard Business Review « Dr Alf's Blog

  4. Pingback: Cyprus – Why Krugman got it wrong « Dr Alf's Blog

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