Omicron will not affect Cyprus recovery

Cyprus Central Bank does not believe the emergence of Omicron will be enough to derail the country from its economic recovery in the medium term.

The Central Bank said Friday that uncertainty over the emergence of the Omicron variant is still significant and is related to the transmissibility of the virus, its ability to evade vaccine efficacy while other variants may emerge.

In its medium-term forecast for December, the Central Bank noted: “Nevertheless, the economic recovery is not expected to be affected in the medium term.”

Due to the introduction of incentives to boost the vaccination coverage of the population, the working hypothesis adopted is that no new restrictive measures that significantly affect economic activity will be imposed, and the health crisis resolved in 2022.

Compared to the June 2021 forecast, the CBC’s updated GDP forecasts have been revised significantly upwards.

The main macroeconomic figures of the Cypriot economy for 2021-24 show the country’s GDP in 2021, recording a recovery of 5.6% and around 3.7% GDP per annum in the years 2022-24.

The CBC factored higher vaccination coverage of the population compared to the pre-summer period, and the significant support for economic activity was expected from the EU Recovery and Resilience Fund.

On inflation, the CBC revised its June 2021 forecast, noting an upward trend is to be expected for 2021 (2.2%) and 2022 (2.5%).

This is due to significant increases in energy prices and the persistent problems in supply chains of international trade in the face of growing demand.