Cyprus Economic Forecast

Cyprus Economic Outlook

May 31, 2022

A flash estimate revealed that GDP grew 0.7% quarter-on-quarter in Q1, an identical pace to Q4 2021. While a detailed breakdown is not yet available, the services sector likely supported activity thanks to lower unemployment and reduced Covid-19 restrictions. Moreover, industrial output gained steam in January–February in annual terms. Turning to Q2, momentum is likely easing as food and energy price hikes due to the Ukraine War take their toll. Business and consumer confidence plummeted in April, boding poorly for consumption and private investment in the second quarter. While the recent lifting of all remaining travel restrictions will benefit the tourism sector, the reliance on Russian tourists will prevent the sector’s full recovery. Finally, in May the EU Commission recommended focusing on reducing non-performing loans and mitigating climate change risks.

Cyprus Economic Growth

Growth is expected to slow this year due to the Ukraine war, with soaring inflation affecting private consumption and Russian tourism inflows dampened: Russia represented around 20% of tourist revenues in 2016–2019. However, a tighter labor market and the fading impact of the pandemic should soften the slowdown in household spending. FocusEconomics analysts see GDP growing 3.0% in 2022, which is unchanged from last month’s forecast. In 2023, our panel sees the economy expanding 3.3%.

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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