Finance Minister concerned over rising energy and grain prices

Finance Minister Constantinos Petrides said today that he is concerned about the rising prices of grain and energy and the possibility of 'stagflation', but excluded the possibility of the Cypriot economy slipping into recession.

Speaking on the sidelines during today's meeting with the Office of the Commissioner for State Aid Control, Petrides said public financing will be affected by the continuing war in Ukraine.  Noting that next week he will be attending the Eurogroup and ECOFIN meetings where discussions will take place with regards to the general impact on European economies in the aftermath of the pandemic and the continuing war in Ukraine, after which he will then have a more comprehensive picture.

When asked whether he was concerned about the possibility of the Cypriot economy slipping into recession, Petrides said that "the job of the Ministry of Finance is always to worry, especially in times of such geopolitical developments," stressing that he did not believe that the Cypriot economy would enter a recession phase.

"The economic growth rate will be affected, but I think it will be positive," he said, adding that "we are starting to build on 80 percent of the tourism flow and this will bring in revenues which we did not have even last year when the flow was at 50 percent."

He continued by saying that "The main concern right now is inflation, which is already high as a result of the pandemic.  We are looking at measures to mitigate rising costs as well as disruptions to gas supply," he stressed, noting that "there are no easy solutions and it is for this reason that also at the global level, alternative sources of gas and fossil fuel supply need to be found or some decarbonization measures need to be taken more quickly so that this issue is somewhat mitigated."

But according to Petrides, due to the EU's heavy dependence on Russian gas and oil, "this will not be without consequences".