Cyprus Economic Forecast

Cyprus Economic Outlook

June 2, 2020

The economy lost stride in Q1, with GDP growth easing to a five-year low as the coronavirus pandemic started to take its toll. Although domestic demand rebounded strongly, exports suffered on subdued foreign demand—dragging on the overall upturn. Turning to Q2, the economy is poised to take a more drastic hit amid the virtual halt in activity in April. Consumer confidence slumped to a six-year low in April–May, while business sentiment plunged to a record low in the same period, boding ill for household and capital spending. On a more positive note, the country is currently underway on its gradual lifting of lockdown measures, with 9 June slated for allowing inbound travel. In a bid to reboot the economy, on 27 May the government announced a second fiscal package comprising of EUR 430 million in direct assistance and more than EUR 1.0 billion in credit facilities.

Cyprus Economic Growth

The Covid-19 outbreak and subsequent confinement measures will deal a massive blow to the economy this year, with the vital tourism sector expected to be particularly hard hit. Domestic demand will also suffer as households pare back their spending and investment is subdued by weak sentiment. The large public and private debt burden is a key downside risk ahead. FocusEconomics analysts see GDP shrinking 7.0% in 2020, which is up 0.4 percentage points from last month’s forecast, before growing 5.9% in 2021.

Cyprus Economy Data

2015 2016 2017 2018 2019
Population (million)0.80.80.90.90.9
GDP per capita (EUR)21,04722,25623,43824,465-  
GDP (EUR bn)17.818.920.021.1-  
Economic Growth (GDP, annual variation in %)3.46.84.44.1-  
Consumption (annual variation in %)2.84.44.53.3-  
Investment (annual variation in %)-0.248.924.1-6.6-  
Exports (G&S, annual variation in %)9.97.28.74.6-  
Imports (G&S, annual variation in %)8.19.012.82.4-  
Industrial Production (annual variation in %)4.810.37.26.6-  
Retail Sales (annual variation in %)-  5.26.25.4-  
Unemployment Rate15.013.011.18.47.4
Fiscal Balance (% of GDP)-1.00.11.7-4.4-  
Public Debt (% of GDP)10810393.9101-  
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 %)-5.1-4.23.42.32.3
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-  
Current Account Balance (EUR bn)-0.1-0.8-1.0-0.9-  
Trade Balance (EUR billion)-3.2-4.2-5.0-4.7-  

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Cyprus Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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