Cyprus’ economy will grow by more than 6% GDP this year, crashing the EU average, said Finance Minister Constantinos Petrides.
In comments after a cabinet meeting on Tuesday, Petrides said the latest figures released by the Cyprus statistical services show the economy grew by 5.5% GDP in the third quarter.
“With this rate, we can be certain that the growth rate for 2022 will be higher than 6%.
“The growth rate for the first quarter was 6.6% and 6.3% for the second.
“Thus, the ministry’s forecast for the whole year is now adjusted to 6% from a previous 5.7%,” said Petrides.
He noted that the island’s annual growth rate would be substantially higher than the EU average of 2.4% GDP and the Eurozone’s 2.1%.
“This goes to prove the resilience, but also the prospects of the Cypriot economy during a very difficult period, during which a number of EU economies may even enter a period of recession.”
The Finance Minister said the government’s development plan is on track and is set to continue with the 2023 budget, noting that fiscal policies have helped the country outperform European peers.
“We should continue on this path, which has been proven to benefit society without ignoring the problems created by inflation and hiking energy prices.”
His optimism comes despite Cystat’s data recording a slowdown of the economy’s growth in previous months due to high inflation and the war in Ukraine.
According to the Flash Estimate of the Statistical Service, the GDP growth rate of the economy in Q3 2022 is estimated at 5.5% compared to the same quarter of 2021.
Seasonally adjusted, the growth rate is estimated at 5.4% GDP, down from 6.3% in Q2 (revised estimate).
Despite the economic slowdown, the growth rate is among the highest in the EU.
According to CyStat, GDP growth is mainly due to: Hotels and Restaurants, Transportation, Information and Communications, Trade and Arts and Entertainment.
Slower economic growth is expected in the coming months.
In October, the Centre for Economic Research of the University of Cyprus revised its estimates for the economy’s growth in 2022 upwards.
It forecasts GDP to grow by 4.9% in 2022.
The forecast was revised by two percentage points compared to UCy’s previous edition, due to strong growth in Q2 and strong demand in Q3, mainly due to increased tourism.
However, the negative effects of the ongoing war in Ukraine on economic activity appear to be unfolding more slowly than previously thought, impacting the outlook for 2023.
Real GDP growth in 2023 is forecast at 2.4%, down by 0.4 percentage points relative to the forecast in the July issue.
The downward revision was driven by several factors, including sustained upward price pressures, the deterioration of EU economic sentiment, the weakening of business confidence in services, and the uptick of lending rates in the euro area.