Cliff on the ocean in Cyprus

Cyprus Economic Forecast

Cyprus Economic Outlook

A flash estimate revealed that year on year economic growth accelerated to 2.5% in Q3 from 2.2% in Q2. The release stated that growth was driven by the hospitality, transportation, retail and information sectors. Lower inflation in the period should have supported domestic activity. Meanwhile, the contribution of the external sector is not clear-cut when looking at monthly data. On the one hand, merchandise exports accelerated markedly in the period. On the other hand, growth in tourist arrivals slowed. Early data for Q4 points to a slight growth deceleration. Economic sentiment ticked down in October on weaker confidence in the retail and services sectors. In other news, Scope Ratings upgraded the country’s rating to ‘BBB+’ from ‘BBB’ in mid-November, citing improving fiscal metrics and robust economic fundamentals.

Cyprus Inflation

Harmonized inflation fell to 3.6% in October from September’s 4.3%. The decline was driven by softer price pressures for food and housing and utilities. In 2024, our panelists see inflation below this year’s average level, thanks to the lagged effect of monetary tightening and a higher base effect. Commodity price spikes pose an upside risk.

This chart displays Economic Growth (GDP, annual variation in %) for Cyprus from 2013 to 2022.

Cyprus Economic Data

2018 2019 2020 2021 2022
Population (million) 0.9 0.9 0.9 0.9 0.9
GDP (EUR bn) 21.7 23.2 22.1 24.9 27.8
GDP per capita (EUR) 25,087 26,459 24,872 27,821 30,693
Economic Growth (Nominal GDP, ann. var. %) 6.7 6.9 -4.7 12.9 11.4
Economic Growth (GDP, ann. var. %) 5.6 5.5 -3.4 9.9 5.1
Private Consumption (ann. var. %) 5.1 3.8 -6.9 5.2 8.7
Government Consumption (ann. var. %) 3.6 12.4 10.6 7.9 2.7
Fixed Investment (ann. var. %) -4.9 6.9 4.7 -0.1 7.8
Exports (G&S, ann. var. %) 7.2 8.7 2.2 21.6 13.6
Imports (G&S, ann. var. %) 4.3 9.5 3.1 15.4 18.3
Industrial Production (ann. var. %) 7.4 4.4 -7.3 6.4 1.1
Unemployment (% of active population, aop) 8.4 7.1 7.6 7.5 6.8
Fiscal Balance (% of GDP) -3.6 0.9 -5.7 -1.9 2.4
Public Debt (% of GDP) 98.5 93.0 114.9 99.3 85.6
Inflation (CPI, ann. var. %, eop) 1.7 0.7 -1.1 4.8 7.9
Inflation (HICP, ann. var. %, eop) 1.0 0.7 -0.8 4.8 7.6
Inflation (HICP, ann. var. %, aop) 0.8 0.5 -1.1 2.3 8.1
ECB Refinancing Rate (%, eop) 0.00 0.00 0.00 0.00 2.50
ECB Overnight Deposit Rate (%, eop) -0.40 -0.50 -0.50 -0.50 2.00
3-Month EURIBOR (%, eop) -0.31 -0.38 -0.55 -0.57 2.13
Exchange Rate (USD per EUR, eop) 1.14 1.12 1.22 1.14 1.07
Exchange Rate (USD per EUR, aop) 1.18 1.12 1.14 1.18 1.05
Current Account Balance (EUR bn) -0.9 -1.3 -2.2 -1.5 -2.2
Current Account Balance (% of GDP) -4.0 -5.6 -10.0 -6.1 -7.9
Merchandise Trade Balance (EUR bn) -4.5 -4.6 -4.2 -4.4 -6.0
Foreign Direct Investment (EUR bn) -0.4 46.6 -20.0 -31.4 4.6

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