Cyprus Economic Forecast

Cyprus Economic Outlook

December 20, 2019

Annual growth picked up in Q3 on the back of more upbeat external demand, after slowing to an over four-year low in the second quarter. Domestically, although private consumption held solid and public expenditure growth was its highest in over two decades, shrinking inventories and cooling investment activity weighed heavily on demand. Heading into Q4, available data is mixed: Business confidence strengthened in October–November compared to Q3 while tourist arrivals picked up pace in the same period; however, households turned more pessimistic—boding ill for consumer spending. In other news, at the conclusion of its Article IV visit to the island on 27 November, the IMF welcomed the country’s robust economic recovery and authorities’ efforts to address vulnerabilities in the banking sector. It also, however, encouraged further progress towards ensuring an effective NPL resolution framework.

Cyprus Economic Growth

The economy is expected to lose stride next year, although activity should remain strong overall. In particular, solid private consumption should continue to underpin growth, thanks to a tightening job market and a recovery in bank lending. Brexit-related uncertainties, a cooling tourism industry and lingering debt vulnerabilities all cloud the outlook. FocusEconomics analysts see growth at 2.8% in 2020, which is unchanged from last month’s forecast, and 2.6% in 2021.

Cyprus Economy Data

2014 2015 2016 2017 2018
Population (million)0.90.90.80.80.9
GDP per capita (EUR)20,94720,52420,95221,80422,981
GDP (EUR bn)18.117.617.718.519.6
Economic Growth (GDP, annual variation in %)-5.8-1.32.04.84.5
Consumption (annual variation in %)-5.71.02.44.54.1
Investment (annual variation in %)-16.6-19.013.841.829.0
Exports (G&S, annual variation in %)2.14.35.24.66.0
Imports (G&S, annual variation in %)-4.03.68.46.612.2
Industrial Production (annual variation in %)-13.40.04.810.37.2
Retail Sales (annual variation in %)-  -  -  5.26.2
Unemployment Rate15.916.214.913.011.2
Fiscal Balance (% of GDP)-5.1-9.0-1.30.31.8
Public Debt (% of GDP)10310810810695.8
Inflation Rate (HICP, annual variation in %, eop)-1.3-1.0-0.60.1-0.4
Inflation Rate (HICP, annual variation in %)0.4-0.3-1.6-1.20.7
Inflation (PPI, annual variation in %)-2.1-2.9-5.1-4.23.4
Policy Interest Rate (%)-  -  -  -  -  
Exchange Rate (vs USD)-  -  -  -  -  
Exchange Rate (vs USD, aop)1.331.331.111.111.13
Current Account (% of GDP)-4.9-4.3-1.5-5.1-8.4
Current Account Balance (EUR bn)-0.9-0.8-0.3-0.9-1.6
Trade Balance (EUR billion)-2.9-2.8-3.0-3.9-4.8

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Cyprus Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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