The European Commission’s winter forecast confirms the positive course of the Cypriot economy, with real GDP increasing 5.3% in the first ninth months of 2021 and a further increase of 4.1% projected in 2022.
According to a Ministry of Finance announcement, real GPD in 2021 in Cyprus recovered vigorously.
“As a result, losses due to the pandemic crisis of 2020 are expected to be fully recovered, increasing trust in the economic environment and reinforcing the state’s position to support sustainable development through its commitment to prudent fiscal policy, emphasising investments promoting reforms.”
The announcement said that Cyprus’ real GDP has risen by 5.3% during the first nine months of 2021 compared to the same period last year.
The growth came from domestic demand, supported by the fiscal stimulus and exports of services, including tourism.
From January to October 2021, income from tourism reached 53% of the same period in 2019.
As a result, Cyprus’ real GPD is expected to rise by 5.3% for 2021.
According to the Commission’s forecast, the risks for growth remain balanced.
Although the COVID-19 cases have increased recently and the consumer purchasing power has been eroded by high inflation, economic growth is expected to accelerate in Q2 2022 due to the high vaccination percentage of adults and limited COVID restrictions.
The Ministry of Finance said prospects for the tourist season are positive, based on data from scheduled international flights.
In 2022, real GDP is projected at 4.1%, mainly due to domestic demand, namely investments supported by the Recovery and Resilience Plan and the small positive contribution from net exports.
In 2023, GDP growth is projected at 3.5%.
The Commission said the main factor for the increase in inflation, at 2.3% in 2021, was high energy prices.
Their projections show inflation will rise to 2.6% in 2022, which is still significantly lower than the European average (3.9%).
De-escalation is expected in 2023, with the forecast at 1.2%.
It is also noted that the estimated 2021 GDP growth in Cyprus is equal to the Eurozone and EU average.
GDP growth will be slightly better in 2022 at 4.1% compared to 4.0% in the Eurozone and EU, and significantly higher in 2023 at 3.5%, compared to 2.7% in the Eurozone and 2.8% in the EU.