Cyprus Economic Forecast

Cyprus Economic Outlook

September 1, 2020

The economy plunged at a record rate in Q2 according to a preliminary estimate, as the pandemic and subsequent restrictions hammered the tourism, construction and transportation sectors. Moreover, the wholesale and retail trade sector also plunged amid a spike in the unemployment rate and plummeting consumer confidence. Turning to Q3, the economy is likely recovering somewhat, with economic sentiment improving in July and August. Furthermore, lockdown measures have been eased notably since April and borders with some countries reopened in June, which should be providing some relief to the services sector. Less positively, consumer confidence tanked in August amid rising new Covid-19 cases. Meanwhile, it was recently announced that Cyprus is set to receive EUR 479 million in loans from the EU under the SURE scheme, which bodes well for the recovery ahead.

Cyprus Economic Growth

The economy is expected to contract markedly this year due to the Covid-19 shock. Frail demand from key trading partners and fewer tourist arrivals will batter the external sector. Domestically, household consumption will suffer amid a surge in unemployment while investment will retreat on elevated uncertainty. The country’s large debt load poses a key risk. FocusEconomics analysts see GDP shrinking 6.9% in 2020, which is down 0.1 percentage points from last month’s forecast, before growing 5.0% in 2021.

Cyprus Economy Data

2015 2016 2017 2018 2019
Population (million)0.80.80.90.90.9
GDP per capita (EUR)21,04722,25623,43824,46525,050
GDP (EUR bn)17.818.920.021.121.9
Economic Growth (GDP, annual variation in %)3.46.84.44.13.2
Consumption (annual variation in %)2.84.44.53.33.0
Investment (annual variation in %)-0.248.924.1-6.60.1
Exports (G&S, annual variation in %)9.97.28.74.62.0
Imports (G&S, annual variation in %)8.19.012.82.41.5
Industrial Production (annual variation in %)4.810.37.76.63.2
Retail Sales (annual variation in %)-  5.26.25.43.2
Unemployment Rate14.913.011.18.47.0
Fiscal Balance (% of GDP)-1.00.32.0-3.71.7
Public Debt (% of GDP)10810393.910195.5
Inflation Rate (HICP, annual variation in %, eop)-0.60.1-0.41.00.7
Inflation Rate (HICP, annual variation in %)-1.6-1.20.70.80.6
Inflation (PPI, annual variation in %)-5.1-4.23.42.32.2
Policy Interest Rate (%)-  -  -  -  -  
Exchange Rate (vs USD)-  -  -  -  -  
Exchange Rate (vs USD, aop)1.111.111.131.181.12
Current Account (% of GDP)-0.5-4.2-5.1-4.4-6.7
Current Account Balance (EUR bn)-0.1-0.8-1.0-0.9-1.5
Trade Balance (EUR billion)-3.2-4.2-5.0-4.7-4.7

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Cyprus Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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