Cyprus Economic Forecast

Cyprus Economic Outlook

September 25, 2018

The latest GDP data showed that robust momentum was maintained in Q2, with the economy growing at the 3.9% annual pace logged in Q1. A nearly 50% surge in capital spending largely underpinned the expansion. Meanwhile, available data points to the extension of healthy economic activity into Q3: The labor market continues to improve—the unemployment rate dipped to a seven-year low in July—while a record number of tourists visited the island in July–August. Compounding the good news, on 14 September S&P Global Ratings raised the country’s credit rating back to investment grade after more than six years in “junk” status. Besides strengthening confidence in the economy, the move should alleviate borrowing costs for the Cypriot government and banks.

Cyprus Economic Growth

Although the economy is expected to lose some steam next year, growth should remain strong thanks to a growing tourism industry and tightening labor market. A highly-leveraged private sector and a banking system laden by non-performing loans cloud the outlook, however. FocusEconomics panelists project growth of 3.6% in 2018 and 2.9% in 2019, down 0.1 percentage points from last month’s estimate.

Cyprus Economy Data

Population (million)
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-
Consumption (annual variation in %)-
Investment (annual variation in %)-12.9-17.613.635.027.8
Exports (G&S, annual variation in %)
Imports (G&S, annual variation in %)-
Industrial Production (annual variation in %)-13.4-
Retail Sales (annual variation in %)-  -  -  5.26.0
Unemployment Rate15.916.214.913.011.1
Fiscal Balance (% of GDP)-5.1-9.0-
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 (%)
Exchange Rate (vs USD)1.381.
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

Exchange Rate1.160.65 %Oct 12
Stock Market68.2-0.44 %Oct 12

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