COVID19: IMF sees modest 2021 Cyprus recovery

The International Monetary Fund estimates the Cyprus economy will bounce back from the Covid-19 pandemic at a lower GDP rate than its earlier projections.

In 2021, the Cyprus economy is projected to grow by 4.7% GDP compared with 5.6% in the April outlook with the Euro Area expected to recover with 5.2% growth.

According to the IMF World Economic Outlook (WEO) in October, Cypriot real GDP is projected to shrink by 6.4%, compared to 6.5% in the April 2020 WEO.

It is a less severe recession compared to the Euro Area where the economy is expected to shrink by 8.3% in 2020 (from 6.6% in April).

According to the IMF, unemployment from 7.1% in 2019 is estimated to rise modestly in 2020 reaching 8%, and decline to 7% in 2021, compared with the respective projections for 8.8% and 7.4% in April.

Cyprus’ current account balance is projected to plunge to -10.6% GDP in 2020 from -6.7% in 2019 and will decline to -9.1% next year, while is projected to decline to -3.5% in 2025.

The global economy is expected to decline by 4.4% GDP this year to recover in the following year with 5.2% GDP rebound.

“The global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April,” the IMF report said.

“With the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations”.

The IMF said while the recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.