STUDY Cyprus »Bleak recovery« and signs of hope MICHALIS PERSIANIS October 2015 „ „ Cyprus has»survived the fall«, showing stronger-than-expected performance since the crisis erupted in 2013. „ „ However, imbalances remain strong as indebtedness in the private sector has not been tackled. The main concern now is that the country will continue to suffer flat GDP growth, with restrictive credit and low employment becoming a»new normal«. The banking system has reacted impressively but still has quite some way to go. „ „ Structural reform, including measures to reduce red tape, will be critical for the country’s future prospects. Other external factors, such as the discovery of natural gas and possible resolution of the Cyprus problem are very promising, if handled carefully.