DBRS Morningstar: GDP growth steady at 2.1%

International rating agency DBRS Morningstar predicts the GDP growth rate of the Cyprus economy in 2023 will remain at 2.1%, according to updated baseline macroeconomic scenarios.

DBRS estimates that in 2024 Cypriot GDP will expand at 2.4%, marking a minor marginal upgrade of the estimate by 0.1% compared to the corresponding December 2022 forecast.

This year’s unemployment rate is estimated to be 6.8% (+0.2%) before dropping to 6.4% in 2024 (unchanged from the December forecast).

DBRS notes that country forecasts for growth this year have been broadly revised upwards, while, in contrast, the estimate for the growth rate for 2024 has been revised downwards as economists factor in the estimated economic slowdown or even mild recession at a later stage.

It argues that for some smaller developed economies, particularly in Europe, growth forecasts have been revised upwards for both 2023 and next year.

For Greece, it estimates that growth in 2023 will rise to 1.5% (+0.4%) and stay at 1.5% (+0.1%).

In Germany, it is estimated that a contraction of 0.1% will be recorded (-0.1% from the previous forecast), while for 2024, growth of 1% is expected (unchanged).

DBRS has revised its estimates for the UK economy, estimating that GDP will grow by 0.2% this year, down from -0.2% last December, while the estimate for growth in 2024 fell 0.1%.

But DBRS estimates that tighter monetary policy will likely have a stronger impact later this year and towards 2024.

It predicts, however, that simultaneous recession in most major advanced economies may prove to be too pessimistic.

DBRS also noted that turmoil in the banking sector had been contained, although pressures on less diversified banks could re-emerge if losses in commercial real estate begin to multiply.