Nicosia welcomes EU forecast on weaker recession

Cyprus’ Finance Ministry has welcomed the European Commission winter forecast indicating the recession in 2020 was less severe than first predicted with the economy shrinking 5.8% GDP due to the pandemic.

Nicosia is pleased as Brussels revised its economic recession downward from -6.2% GDP in its autumn forecast, coming closer to the government’s projection of -5.5%.

“The European Commission confirms the strong recovery of the Cypriot economy in the third quarter of 2020 (+9.4% compared to the second quarter), attributable to high domestic demand which according to the Commission was the result of government measures to support the economy,” said the ministry on Thursday.

It argued that Cyprus’ economy was on the recovery path in September and October after reaching historically low levels due to the pandemic, but the growth momentum was halted by restrictions leading to a second lockdown.

The Finance Ministry stressed the economy is expected to shrink by one per cent less than the average rate in the Eurozone which is 6.8%.

“Cyprus compares favourably with most member-states with a large tourist sector, for which the EU forecasts a contraction over 9%.”

When it comes to recovery, the Commission expects the Cypriot economy to grow by 3.2% GDP in 2021 and 3.1% in 2022.

The Finance Ministry forecasts 4.5% GDP growth for 2021.