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CYPRUS ECONOMY

Cyprus Economic Outlook

March 1, 2022

GDP growth accelerated year-on-year in the fourth quarter. Although a detailed breakdown is not yet available, subsectors related to tourism—such as hotels and restaurants—and the internal market—such as wholesale and retail trade—were among those that performed well. Moving on to Q1 2022, easing restrictions should be lending some strength to the tourism sector. That said, domestic demand dynamics seem sluggish, with motor vehicle registrations down by double digits in January. In other news, on 14 January, Scope Ratings affirmed the country’s rating at ‘BBB-’, while maintaining a stable outlook. Among positive factors in the economy, Scope underlined the reformist government and the EU-sponsored recovery plan, although lingering vulnerabilities in the banking sector prevented an upward revision.

Cyprus Economic Growth

The economy should slow down this year, following a swift recovery in 2021, weighed on by a less favorable base effect. The gradual easing of Covid-19 restrictions at home and abroad should spark the key tourism sector. Meanwhile, the country’s vulnerability to new variants of the virus poses a risk to the outlook. Focus Economics analysts see GDP growing 4.1% in 2022, which is unchanged from last month’s forecast. In 2023, our panel sees the economy expanding 3.5%.

Cyprus Economy Data

2015 2016 2017 2018 2019
Population (million) 0.8 0.8 0.9 0.9 0.9
GDP per capita (EUR) 21,047 22,256 23,438 24,465 25,050
GDP (EUR bn) 17.8 18.9 20.0 21.1 21.9
Economic Growth (GDP, annual variation in %) 3.4 6.8 4.4 4.1 3.2
Consumption (annual variation in %) 2.8 4.4 4.5 3.3 3.0
Investment (annual variation in %) -0.2 48.9 24.1 -6.6 0.1
Exports (G&S, annual variation in %) 9.9 7.2 8.7 4.6 2.0
Imports (G&S, annual variation in %) 8.1 9.0 12.8 2.4 1.5
Industrial Production (annual variation in %) 4.8 10.3 7.7 6.6 3.2
Retail Sales (annual variation in %) 5.2 6.2 5.4 3.2
Unemployment Rate 14.9 13.0 11.1 8.4 7.0
Fiscal Balance (% of GDP) -1.0 0.3 2.0 -3.7 1.7
Public Debt (% of GDP) 108 103 93.9 101 95.5
Inflation Rate (HICP, annual variation in %, eop) -0.6 0.1 -0.4 1.0 0.7
Inflation Rate (HICP, annual variation in %) -1.6 -1.2 0.7 0.8 0.6
Inflation (PPI, annual variation in %) -5.1 -4.2 3.4 2.3 2.2
Policy Interest Rate (%)
Exchange Rate (vs USD)
Exchange Rate (vs USD, aop) 1.11 1.11 1.13 1.18 1.12
Current Account (% of GDP) -0.5 -4.2 -5.1 -4.4 -6.7
Current Account Balance (EUR bn) -0.1 -0.8 -1.0 -0.9 -1.5
Trade Balance (EUR billion) -3.2 -4.2 -5.0 -4.7 -4.7

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