Cyprus Economic Forecast

Cyprus Economic Outlook

August 27, 2019

A preliminary estimate revealed that the economy shifted into a lower gear in the second quarter, with growth softening to a near four-year low. That said, it remained solid and well above the Eurozone average, propelled by the construction, information and technology, and professional and technical activities sectors. On the expenditure side, healthy wage increases as of late and sustained job market tightening—which saw the unemployment rate dip to an over eight-year low in Q2—likely buoyed household spending, as reflected by strong retail sales data for April–May. On the downside, declining tourist arrivals in May and June, coupled with a wider trade deficit in Q2 from a year ago, indicates that the external sector likely dragged noticeably on growth.

Cyprus Economic Growth

Although growth is projected to ease this year, it should remain solid overall. Sturdy domestic demand, supported by sustained private consumption and a rebound in capital investment, should underpin the expansion. A slowing tourism industry, weaker Eurozone demand, high debt levels, and a large stock of sour loans burdening the banking system all weigh on the outlook. FocusEconomics analysts see growth at 3.2% in 2019, which is unchanged from last month’s forecast, and 2.8% in 2020.

Cyprus Economy Data

Population (million)
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-
Consumption (annual variation in %)-
Investment (annual variation in %)-16.6-19.013.841.829.0
Exports (G&S, annual variation in %)
Imports (G&S, annual variation in %)-
Industrial Production (annual variation in %)-
Retail Sales (annual variation in %)-  -  -  5.26.2
Unemployment Rate15.916.214.913.011.2
Fiscal Balance (% of GDP)-5.1-9.0-
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

Exchange Rate1.100.65 %Sep 04
Stock Market69.9-0.44 %Sep 04

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