A WIDENING GAP EMERGING
Whilst Cyprus is considered one of the more prosperous countries within the European Union, evidence suggests that there is a widening gap slowly developing between affluent and working-class groups all over the island. Prosperity is measured using various factors amd some of the metrics used are often not as accurate as they should be. Key indicators used to assess prosperity typically include GDP per capita, economic growth, quality of life, and employment rates. Cyprus currently ranks among the European Union countries with the lowest poverty rate. This rate has been recently set at just 2.4%. This is in stark contrast to Romania, which has the highest poverty rate recently set at 19.8%.
A RELATIVELY HIGH GDP
Although Cyprus has a relatively high GDP per capita, compared to many other European Union countries, the island has faced huge challenges in its recent past. Sectors on the island, like tourism, financial services, and offshore shipping remain strong, but these have not sheilded recent European economic downturns that have affected the island. The weak political instability, mainly due to the island’s unique situation regarding its division, have also negated many of its economic benefits. Cyprus is also experiencing gradual rises in unemployment rates. This has begun to impact its social benefit responsibilities. All of these underlying factors are all working against otherwise strong economic returns. Other European Union countries, such as Luxembourg, Ireland, and Denmark typically rank higher in terms of overall prosperity mainly because of this.
WHAT IS GDP?
GDP stands for Gross Domestic Product and is used to measure a country’s economic performance. It represents the total monetary value of all finished goods and services produced within a country’s borders within a specific period of time. Generally used to indicate the overall health of a country’s economy, quarterly and annual GDP is taken and then compared to previous GDP figures. These readings are also used to compare economic performance between different countries or periods.
The four primary ways to calculate GDP are
1. Production Approach: This approach measures the total output of goods and services, subtracting the value of intermediate goods to avoid double counting.
2. Income Approach: Calculates the total income earned by individuals and businesses, including wages, profits, rents, and taxes, minus subsidies.
3. Expenditure Approach: This approach sums up all expenditures made in the economy, including consumption, investment, government spending, and net exports.
4. Nominal Approach: This is measured using current prices that are adjusted for inflation in real time, providing a more accurate reflection of an economy’s size and how it is growing over time.
CYPRUS LIFE AT A HIGH COST
A GUIDE TO MANAGING RISING LIVING COSTS IN CYPRUS
REDUCING COSTS
As with the rest of Europe, living costs in Cyprus have risen significantly over the last few years. This has caused most Cypriot household budgets to struggle at the best of times. The most recent rises have stemmed from a combination of both global and domestic factors. These include wars, soaring energy prices, disrupted supply chains, and workforce shortages. All of these have driven island wide rises in inflation, causing price hikes for essential goods, rents, and most services.
A challenging reality of higher living costs for most residents has prompted some to adopt smarter financial habits. This new way of managing household budgets has enabled several Cypriot residents to navigate difficult financial times.
Some of these proactive steps to reduce overall costs are listed below
HOW TO COPE WITH RISING COSTS
1. Finances: Forming a list of essential monthly expenses will help to create a budget that will track both income and outgoings. This may also identify areas where a reduction of unnecessary spending can be achieved. The cancellation of unused subscriptions or expensive policies will allow for negotiation for better rates on most essentials. These include expensive broadband or phone contracts that may not be needed, to help manage budgets.
2. Debt Management: Compiling a set of payment priorities should help manage budgets. Listing first the most essential payments like basic living expenses will help prioritise monthly payments. This will ensure that minimum payments will be met and will help avoid expensive penalties. Negotiation is key, and landlords may be willing to help good tenants who have payment difficulties. Some landlords may agree to new terms or accept partial payments until further notice. Equally it could also be beneficial for home owners to approach the bank seeking new favourable terms. Paying off debts with the highest interest rates is another good way of reducing overall costs. Creditors may be willing to arrange more manageable repayment plans if current payments cannot be met. The consolidation of debts by transferring credit card balances to a 0% interest card to ease repayment burdens should also be considered.
3. Energy Costs: Energy efficiency measures should also be taken. Using fans instead of air conditioning and washing clothes at lower temperatures can have a substantial reduction to utility bills. When replacing appliances, look for those with the Energy Star labels that are designed to use less energy. LED light bulbs use significantly less energy and last much longer than conventional bulbs. Electronics that use the standby facility still consume energy even when they seem turned off, so physically turning off the switch on plugs will also save energy.
4. Food Bills: Planning meals in advance will help reduce waste. Bulk buying may be another strategy that will help reduce grocery budgets. It is a good idea to take advantage by tracking weekly deals and special discounts that most supermarkets regularly offer.
5. Running a car: The cost of fuel is the main factor when running a car. Several things can be done to use less fuel. The most obvious one is driving a smaller economic vehicle that will slash fuel costs. Maintaining proper tire pressure and adopting fuel-efficient driving habits, such as gradual acceleration and timely gear changes, can also help you save money on fuel.
6. Transport: Buses are a proven cost cost-effective way of travelling throughout the island. Using this form of transport instead of a car to commute to and from a place of work will also reduce costs. Using buses wehne possible will help to create savings on expensive fuel and parking costs. Daily, weekly or monthly bus passes are easily available and there are regular bus services that connect all of the town and city centres. Buses also run from most rural areas throughout the island. Online bus timetables can be effectively tracked using a smartphone app. This allows for easy, efficient journey planning in real-time.
