Cyprus: GDP grows at softest pace since Q1 2021 in Q4 2022
According to a preliminary reading, GDP growth lost steam, falling to 4.6% year on year in the fourth quarter, from 5.5% in the third quarter. Q4’s reading marked the slowest expansion since Q1 2021.
On a working-day and seasonally adjusted quarter-on-quarter basis, economic growth ebbed to 1.1% in Q4 from the previous quarter’s 1.3% growth.
The flash estimate highlighted that growth continued to be driven by the hospitality, transportation, information and trade sectors.
A full breakdown is set to be released on 1 March.
Going forward, economic growth will slow further. Higher interest rates will constrain investment, while consumers will feel the pinch of still-elevated inflation. That said, our panelists expect activity to be resilient and see the economy expanding at a faster clip than most EU countries.
Analysts at the EIU commented on the outlook:
“We forecast Cypriot real GDP growth of 1.5% in 2023 […] well above our forecast for stagnation in the euro area in 2023. Growth in Cyprus will be supported by its limited exposure to elevated natural gas prices, and the likely strong performance of the tourism sector in the coming quarters.”