Nicosia heralded its economic performance as the best in the eurozone, with Finance Minister Constantinos Petrides welcoming data showing Cyprus had quarterly GDP growth of 2% in Q1.
According to Eurostat, only Bulgaria (2.5%) and Romania (2.8%) outperformed Cyprus in the EU for quarter-on-quarter real GDP growth, despite the pandemic.
Cyprus’ GDP in the first quarter of 2021 increased 2%, compared to the previous quarter (Q4 2020), compared to a contraction of 0.6% in the euro area.
“The above increase is the highest recorded in the eurozone while most European countries continue to have negative growth rates compared to the previous quarter.
“This shows the capacity of the Cypriot economy, the effectiveness of pandemic management, and the Government’s support measures, prescribe very positive prospects for the next quarters,” argued Petrides.
He said Cyprus’ economy is set to grow by between 4.5% and 5% this year.
Previously, the Finance Ministry forecast GDP growth of 3.7% for 2020.
The Finance Minister cited a stronger first quarter and the country’s COVID-19 vaccination programme for the upward revision.
He said the government is “convinced that with the momentum of the Cypriot economy, a restart of the market, rapid progress on the vaccination front and the right economic policies we can reach that target”.
First-quarter flash data released on Tuesday showed an annual 1.6% GDP contraction compared with the same period last year.
The fallout from the pandemic did not reach Cypriot shores until mid-March last year.
A slower contraction of GDP in Q1 -1.6% is much improved from the initial estimate of the Finance Ministry.
The island registered a 5.1% contraction in its economy last year.
Defending his ministry’s projection of 4.5-5% GDP growth this year, the Finance Minister said Cyprus successfully kept the economy’s contraction at lower than anticipated levels.
“We are convinced that with the dynamics of the Cypriot economy, the reopening of the market, the rapid progress of the vaccination program and proper financial management, we will achieve this goal as well.
Just as we managed in 2020 – the most difficult year of the pandemic – to limit the decline in GDP to only 5.1%, despite the European Commission’s initial estimates of a 7.7% recession.”
Cyprus recently emerged from its third coronavirus lockdown, with President Nicos Anastasiades announcing a €4.4 bln stimulus package to create 11,000 jobs.
“Cyprus is entering recovery mode, leaning on the pillars of private initiative, our employees and our businesses,” said Petrides.