Hotels, restaurants driving GDP growth

Hospitality is the driving force behind the economy’s 5.6% GDP growth in the first quarter of the year, as other sectors struggle to recover following two years of COVID restrictions.

The recovery recorded in the first three months was 5.6% compared to 5.9% in Q4 2021 and -2.1% in Q1 2021.

GDP for the first quarter generated €5.78 bln, an increase of €308.5 mln compared to the same period in 2021.

According to the Cyprus Statistical Service, the positive GDP growth rate is mainly down to the sectors of Hotels and Restaurants, Transport, Storage and Communications, Arts, Entertainment and Recreation and Other Service Activities.

The trade sector, which includes hotels and restaurants, recorded an annual increase of 13.4%.

The sector’s contribution to the economy was €1.21 bln, up from €1.068 bln, an increase of €143.3 mln compared to last year.

Data shows the construction sector contributed €350.9 mln, recording a decrease of €9.8 mln.

The contribution of the public administration amounted to €1034.3 mln, presenting an annual increase of €20.3 mln.

The professional, scientific, and technical activities sector contributed €567.3 mln from €546mln.

Despite significant growth in the first quarter, the economy is expected to slow in 2022 due to the Russian-Ukrainian crisis and the spike in inflation.

In its spring forecast, the European Commission said it expects to see Cyprus’ GDP grow by 2.3% in 2022 and 3.5% in 2023.

Following a strong 5.5% recovery in 2021, economic activity is expected to drag also due to higher energy costs.

The outlook is more positive for 2023, as tourism is expected to recover further, and world energy prices should drop.