Economy performing better than pre-COVID

Cyprus’ economy is on the rebound following two and a half years of coronavirus restrictions, as indicators perform better than in pre-pandemic 2019.

According to data released by the Cyprus Statistical Services, the island’s economy grew by 6.1% GDP year-on-year in Q2, compared to 6% in Q1. GDP growth in Q2 of 2019 was 5.6%.

In total, GDP reached €11.68 bln in Q2, showing an increase of €664.7 mln compared to Q2 2021 and €573.6 mln in the first half of 2019.

The positive GDP growth rate is mainly due to the sectors of Hotels and Restaurants, Transport and Storage, Information and Communications, Trade, Arts and Entertainment.

The wholesale and retail trade sector, including hotels and restaurants, recorded an increase of 16.2% annually.

Its contribution to the economy was €2.538 bln from €2.183 bln last year, recording an increase of €354.3 mln.

Compared to 2019, the sector shows an increase of €143.2 mln.

The construction sector contributed €691.5 mln, dropping by €27.8 mln compared to 2021 and a decrease of €10.5 million from Q2 2019.

Financial and insurance activities Increased by €25.7 mln, while compared to 2019, it was up €56.6 mln.

The contribution of the public administration amounted to €2.065 bln recording a year-on-year increase of €30.7 mln and €91.7 mln compared to 2019.

Scientific and technical activities contributed €1.134 bln, up from €1.095 bln in 2021 to €1.106 bln in 2019.

Despite strong growth in the second quarter, the economy is expected to slow down in 2022 due to the Russian-Ukrainian crisis fueling a spike in inflation.

Inflation in Cyprus is at a record 10.9%, driven by hikes in electricity and fuel.

The highest inflation rate Cyprus witnessed before July was 10.8% in December 1981.

According to the summer forecasts of the European Commission, the economy is expected to grow 3.2%, up from 2.3% reported in its spring forecasts, while for 2023, expected GDP growth is adjusted to 2.1%, down from 3.5%.

In 2021, the GDP rate reached 5.5%, following a recession of 5% in 2020 and growth of 5.3% in 2019.