The Post-pandemic stimulus to restart the Cypriot economy
The post-pandemic return of Keynes with a vengeance: Under current circumstances, the private sector left to its own devices is not capable of triggering a spontaneous turn of the economy from recession to recovery. Nor can it ensure that the economy will come to rest at full utilisation of productive capacity. For a sustained GDP growth to increase the utilisation of productive capacity, government intervention in the economy is urgently called for. Increasing public investment, already financed by European funds is essential but insufficient. We are therefore proposing that the government should implement a medium-term wage-led strategy: This will increase the purchasing power of workers and thus private consumption, GDP and employment, leading in turn to a virtuous growth cycle.