Cyprus Economic Forecast

Cyprus Economic Outlook

March 26, 2019

A revised estimate shows that annual growth remained stable at 3.8% in Q4 2018, as solid private consumption and surging public spending offset a downturn in highly volatile fixed investment. Data for Q1 2019, meanwhile, suggests growth will moderate somewhat. Although the unemployment rate fell further in January and tourist numbers continued to grow solidly in January-February, both business and consumer confidence deteriorated on average in the first two months of 2019. In other news, a recent report from the European Commission warned that the banking sector’s balance sheets and stock of non-performing loans remain concerning, despite recent improvements, which leaves the sector vulnerable to economic or financial shocks.

Cyprus Economic Growth

Although set to moderate somewhat, the economy should remain in good shape this year, underpinned by solid domestic demand. Particularly, further job gains and rising wages will fuel consumer spending, while a rebound in fixed investment is expected on the back of robust construction activity. However, the hefty stock of bad banking debts and uncertainty surrounding Brexit pose the main downside risks. FocusEconomics analysts see growth at 3.2% in 2019, which is unchanged from last month’s forecast, and 2.6% in 2020.

Cyprus Economy Data

20132014201520162017
Population (million)0.90.90.80.80.9
GDP per capita (EUR)20,94820,52020,94721,48522,525
GDP (EUR bn)18.117.617.718.219.2
Economic Growth (GDP, annual variation in %)-5.9-1.42.03.43.9
Consumption (annual variation in %)-5.90.72.63.34.2
Investment (annual variation in %)-12.9-17.613.635.027.8
Exports (G&S, annual variation in %)2.14.35.84.03.4
Imports (G&S, annual variation in %)-4.84.67.46.810.1
Industrial Production (annual variation in %)-13.4-0.13.48.79.7
Retail Sales (annual variation in %)-  -  -  5.26.0
Unemployment Rate15.916.214.913.011.1
Fiscal Balance (% of GDP)-5.1-9.0-1.30.31.8
Public Debt (% of GDP)10310810810797.5
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 (%)0.250.050.050.00.0
Exchange Rate (vs USD)1.381.211.091.051.20
Exchange Rate (vs USD, aop)1.331.331.111.111.13
Current Account (% of GDP)-4.9-4.3-1.5-4.9-6.7
Current Account Balance (EUR bn)-0.9-0.8-0.3-0.9-1.3
Trade Balance (EUR billion)-3.2-3.6-3.4-4.4-5.3

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Cyprus Facts

ValueChangeDate
Exchange Rate1.130.65 %Apr 22
Stock Market70.5-0.44 %Apr 18

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