On March 10, the health authorities confirmed the first case of COVID-19 coronavirus in Cyprus.
The situation escalated rapidly over the next five days.
The number of confirmed cases rose to 21 (so far, all mild) at the time of writing.
Public gatherings in closed spaces are limited to 75 people, meaning that dozens or even hundreds of weddings, birthday parties, sporting events, conferences, corporate gatherings, exhibitions and other events were cancelled for the short-term future.
Many venues like restaurants, bars and nightclubs remain closed or sparsely attended as people stay home and practice what has become known as social distancing.
Non-Cypriots are not allowed to enter Cyprus unless they are residents or working here and there is a possibility that the hotels will be locked down if things get worse.
The first sector to be hit is tourism and hospitality, and considering this sector makes up around 25 percent of the entire economy, it is something to take very seriously.
It is not a choice between saving lives and saving the economy - both have to be saved because other threats will make things even worse such as unemployment, bankruptcies, widespread shortages. And all without the option to leave and start again in another country because so many countries are closing their borders amid the pandemic.
There are two different scenarios for the Cyprus economy, let’s call them the Titanic, and the Hudson River Landing.
The Titanic
At the time of writing, our economy is the Titanic trying to avoid the iceberg.
Tourism and supply chains like food and beverages have literally come to a screeching halt. But the glacier still lies ahead.
Meanwhile, much of the population is shivering with anxiety at home.
Companies and schools are limiting their operations in the sense that people are studying or working from home.
In just a few days there were hundreds of event cancellations.
Musicians, florists, caterers, beverage suppliers, wedding gown sellers, party favour suppliers and other services lose thousands upon thousands of Euros in income.
About the only businesses which appear to be benefiting for the moment are the grocery shops, home entertainment, takeaway/deliveries and pharmacies.
The grocery shops and malls are reportedly full of people, but this is not reassuring because it ignores the limit of 75 people in a closed space. COVID-19 virus is proven to spread by air transmission through droplets from a sick person’s cough or sneeze. If you are not standing at least a metre away, you run the risk of catching it. The bigger the crowd and the closer they stand together, the higher the risk.
The more people who get COVID-19, the higher the likelihood that the country’s intensive care units will become overwhelmed as happened in Italy.
The longer this situation goes on without a comprehensive economic package from the government and state, the closer this Titanic gets to the iceberg and eventual sinking.
The Hudson River Landing
Flight 1549 was in desperate trouble after striking a flock of Canadian geese on January 15, 2009. But by some miracle of clear-headed thinking and expertise, Captain Chelsey Sullenberger managed to land the plane in the Hudson River, saving all on board.
Meaning that even an imminent disaster could be turned around with decisive action and courage. Can this happen with our economy?
The reality is that we’ll have to learn to live with the virus. The question is, how do we get back to normal as quickly as possible, saving lives and the economy?
It will take leadership of the kind that is rarely seen.
Boosting emergency medical facilities. Slashing electricity prices. Cutting VAT rates. Deferring or suspending social insurance and defence contributions for several months. Opening lines of bank credit at zero percent interest for a limited period - just to keep active and viable companies operating. Emergency funding for entrepreneurial companies, the future of economic growth.
Even the most viable and stable company faces absolute ruin for reasons beyond their control at this point because this is a force majeur situation - an act of God that has been declared an emergency in countries like Italy and the US.
The state will have to act immediately through the banking system to inject capital and make sure that it reaches companies and individuals - the real economy that drives growth.
If the government acts now, there is a chance our economy can go towards the Hudson River Landing scenario.
If not, the worst-case Titanic scenario may come true.
Companies will start layoffs, salaries will be cut, bank loans will go unpaid, bills and taxes be delayed or stay unpaid. Growth will drop off rapidly now that the tourism sector is at a standstill.
If growth crashes, the state will have less access to international lending markets.
This means fewer development projects, riskier state bonds and a vulnerable banking sector.
In conclusion, our current rate of growth is only sustainable if the tourism and hospitality and supply chain sectors receive substantial and concrete financial support from the state.
It’s decision time.
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