Cyprus: GDP growth loses momentum in the first quarter but remains healthy
May 17, 2022
According to a preliminary estimate, GDP growth slowed to 5.8% year-on-year in the first quarter, from 6.4% in the fourth quarter of last year, mainly due to a dwindling base effect. On a working-day and seasonally-adjusted quarter-on-quarter basis, economic growth was stable at the previous period's 0.7%.
Output likely grew notably in the hotels and restaurant sector, with revenue from tourism reaching over 70% of its pre-pandemic level in January–February. Industrial production should also have proved to be a driver for growth, as industrial output gained steam in January–February compared to the previous quarter.
Turning to Q2, the economy is expected to continue benefiting from improved dynamics in the tourism sector as travel restrictions were further eased from mid-April. That said, the reliance on Russian tourists will impede the sector’s full recovery due to EU sanctions on Russia. Moreover, the domestic economic panorama has darkened since the war in Ukraine broke out, as surging energy and food prices will likely cap household spending.