Cyprus: Economic growth falls to a one-year low in the fourth quarter
GDP growth loses traction: According to a preliminary reading, annual GDP growth lost steam in Q4, falling to 2.6% from 3.9% in the third quarter and marking the worst result in a year. Looking at 2024 as a whole, economic growth rose to 3.4% from 2023’s 2.6%, but came in below the prior 10-year average of 4.4%. On a working-day and seasonally adjusted quarter-on-quarter basis, economic growth waned notably to 0.3% in Q4, compared to the previous quarter’s 0.9% increase.
The construction sector drags on growth: The flash estimate did not include a detailed breakdown, but the statistical office stated that the construction sector shrank in Q4. On the flip side, the information and communication, hospitality plus wholesale and retail sectors underpinned growth. Meanwhile, monthly data suggests that the external sector performed more strongly: Tourist arrivals grew at a faster annual clip than in Q3, and goods exports fell at a softer rate.
A comprehensive breakdown is set to be released on 4 March.
Panelist insight: Analysts at the EIU commented:
“We forecast strong real GDP growth in Cyprus in 2025, underpinned by solid private consumption and the performance of the tourism sector. Risks to growth are balanced. Ceasefires in Ukraine or Gaza would potentially lower global energy prices and inflation in Cyprus in 2025, bolstering aggregate demand. However, Cyprus’s exposure to instability in the Middle East (it hosts two British air bases on the island), could pose downside risks to growth were regional instability to spread.”