Economic growth:

Occurs when real output / Gross Domestic Product (adjusted to inflation) increases over time.

Sustainable Economic growth:

Implies “a rate of growth which can be maintained without creating other significant economic problems, especially for future generations. Therefore, there is clearly a trade-off between rapid economic growth today, and growth in the future.” (Economics Online, 2020)

Inclusive Economic growth:

Refers to growth which benefits the mass majority of a population by raising standards of living and other qualitative indicators. Inclusive Growth that allows people to contribute to and benefit from is best suited to tackle poverty and inequality. Rapid growth (an increase in the quantity of inputs/outputs) is by de facto necessary for poverty reduction, but for this growth to be sustainable in the long term, for productivity to improve, for technology to flourish and for other innovative breakthroughs to occur, growth should be broad-based across sectors and inclusive of a large part of the country’s labour force (Ianchovichina & Lundstrom Gable, 2012).

Thus, inclusiveness implies long-term sustainability. 

With Cyprus constantly attracting more and more FDI (Foreign Direct Investment), the country has managed to record economic growth levels for 2022 at an impressive 5.6%. Admittedly, the Central Bank of Cyprus states that a vital role in the achievement of this growth is attributed to “the facilitation of a fast-tract process for incoming firms and a large number of high value-adding foreign companies (mainly financial services, ICT and ship-management sectors) which have been attracted to Cyprus. These incentives are offered in the context of the so-called “International Headquartering” policy.” (Herodotou, 2023)

Limassol in 2023 demonstrates the centre of this epitome, already counting some years since it first became a hot topic amongst investors, not only on tables within the country itself, but most importantly on the international scene. A town with a friendly, extravert identity is slowly evolving into a fast-paced, frenzied, aggressive and competitive city which now seems to be lacking a specific identity. Just one look while entering the city, driving on the highway from Nicosia, and one can really understand what the hype is all about.

 Luxury Towers & Offices.

Blooming in various shapes and sizes, like cherries during springtime, one by one these luxury towers seem to be taking over the city. Some built for residential purposes, others for corporate and office use. Mass inflows of foreign employees are entering the country on a regular basis in the post-pandemic period, promoting this new era of diversity. At the end of 2021, of the total population of Limassol (258,900 people), 53,100 people (21%) were of foreign citizenship, the highest percentage on the island after Paphos with 38% (Savva, 2022).

On one hand, real estate developments and new corporate and international workforce inflows cultivate the environment for “rapid growth”, which is necessary for the eradication of extreme poverty. However, this is only a primary step, and with a GDP per capita of approximately $31,000 (2021 figure), extreme poverty is not really a threat to the Cypriot economy. It never really was, as even in the 1990s, GDP per capita levels fluctuated around the $15,000 yearly figure. Moreover, the rapid growth we are experiencing today has fulfilled the mission of providing a significant short-term boost to the economic slump in the post-2013 financial/banking crisis period, but a decade has already passed since the incident.

Nowadays, it is rather relative poverty (measured as being below 60% of average income) that’s knocking household doors impatiently, and the status quo which brings rapid economic growth might just prove to be the very same reason for the lack of inclusiveness at present and, more profoundly, in near future times. For example, while the average monthly salary in the country is approximately €2,500, a significant portion of the population earn well below this amount. This is proven by the fact that the median (middle value) monthly salary is €1,860 (74% of average income). There is a sense that the middle class everyone used to talk about is now slowly, but steadily, disappearing.

Yes, arrivals and inflows have brought with them quality, knowhow and experience in relevant sectors. And yes, employment levels amongst locals are being raised (unemployment fell from 7.4% in December 2022 to 5.1% in April 2023) and knowhow is expanding. And after all, this is a free-market economy and a situation which cannot and maybe should not be completely reversed. On the other side of the coin, by exponentially increasing with changes in the average salary, sky seems to be the limit for housing prices in Limassol (€20+ per square meter for monthly rentals, not to mention purchasing prices). Owning a house for young couples who do not earn equal or greater salaries than the average is becoming a midnight summer dream, while the overall implications of inflation in both goods and services acts to further squeeze the knot.

Determining Priorities.

Inclusiveness should be the priority, but we are currently standing at a position still far from the promise land. Regardless which side of the fence one is standing and whether they prefer the new status or the past traditional version of Limassol, there exists one solution that fits most challenges in various fields of life: balance.

We believe that minimal, yet more visible to the eyes of the layman, government intervention in critical policy matters which affect the way economic growth and developments unfold, should and must exist. Structuring uniform, consistent long-term policies to benefit the many are certainly required at this critical stage for the city of Limassol and Cyprus in general. Most importantly, all bodies believing in these policies and executing them with accuracy and utmost respect is vital. Because presenting laws and regulations without evenly implementing has never benefitted anyone. It compares to a business promoting sales at its loss, lacking or even avoiding acknowledgement of the situation.

Bibliography:

Economics Online. (2020, January). Retrieved from Sustainable Growth : https://www.economicsonline.co.uk/managing_the_economy/sustainable_growth.html/

Herodotou, C. (2023, March). Central Bank of Cyprus. Retrieved from Economic Trends & Outlook for Euro Area, Impact of ECB Monetary Policy & Outlook for Cyprus Economy: https://www.centralbank.cy/en/the-governor/governor-s-speeches/07-03-2023

Ianchovichina, E., & Lundstrom Gable, S. (2012, October). What is Inclusive Growth? Retrieved from Commodity Price Volatility and Inclusive Growth in Low-Income Countries: https://www.elibrary.imf.org/display/book/9781616353797/ch008.xml

Savva, A. (2022, May). Cyprus Mail. Retrieved from Cyprus population up 9.2% in 10 years to total 918,100: https://cyprus-mail.com/2022/05/18/cyprus-population-up-9-2-in-10-years-to-total-918100/

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