CYPRUS: EBRD ups growth forecast to 3.5% for 2017, 2.5% for 2018

The European Bank for Reconstruction and Development (EBRD), the EU investment arm that has significant stakes in Bank of Cyprus, Hellenic Bank and other infrastructure projects on the island, has upped its growth forecast for Cyprus in 2017 and 2018, by 1% and 0.3%, respectively.

In a report on the growth in 37 countries in which it has invested, EBRD said it expects that the growth rate of the Cypriot economy will reach 3.5% from 2.5% in its previous estimate in May 2017. For 2018, it expects a growth rate of 2.5%, up from 2.2% estimated in May.

However, it raised concerns over the high levels of debt in the economy and the large legacy of non-performing loans (NPLs).

“Economic activity has speeded up in 2017, building on the robust recovery of the past couple of years,” and “GDP growth is estimated at 3.6% year on year in H1 2017, driven by strong performances in retail and wholesale trade, construction and manufacturing,” the EBRD said in its report.

It added that “leading indicators point to another exceptional year for tourism, which is continuing to benefit from instability elsewhere (in the first nine months of 2017, the number of tourist arrivals was nearly 15 per cent higher than in the same period in 2016).”