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COVID19: Cyprus economy bounced back in Q3

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The Cyprus economy bounced back in the third quarter to 9.4% GDP growth from a 13.1% contraction in the previous quarter that included the lockdown period to control the pandemic.

Year-on-year, the Cypriot economy recorded a milder contraction in the third quarter with economic activity showing signs of improvement amid the coronavirus pandemic.

According to a flash estimate issued by the Statistical Service (Cystat), Cyprus real GDP in Q3 shrank 4.4% year on year in seasonally adjusted terms. It had contracted by a higher 12.3% year-on-year in Q2.

Compared with the previous quarter, Cyprus GDP grew 9.4% with the economy showing signs of improvement compared to Q2 when a severe lockdown to contain the pandemic was in place, hampering economic activity.

The negative GDP growth rate in Q3 is attributed to nearly all major sectors of the economy suffering.

Precautionary measures and decrees to address the negative consequences of COVID-19 had a direct impact on the Cyprus economy which exhibited a slowdown during Q1 2020 (-0.9%) and a substantial decline during Q2 (-13.1%).

“The lifting of restrictive measures led to the improvement of the economic growth rate in the third quarter compared to the second quarter of 2020,” Cystat said.

The introduction of local lockdowns in Limassol and Paphos and further restrictions are expected to derail the economy even further this year.

In Q3 2020, seasonally adjusted GDP increased by 12.6% in the euro area, 11.6% in the EU and by 9.4% in Cyprus, compared with the previous quarter, according to Eurostat.

These were by far the sharpest increases observed since time series started in 1995, and a rebound compared with the second quarter of 2020 when GDP had decreased by 11.8% in the euro area and by 11.4% in the EU.

Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 4.4% in the euro area and 4.3% in the EU a partial recovery after -14.8% and -13.9% respectively in the previous quarter.