Cliff on the ocean in Cyprus

Cyprus GDP Q3 2019

Cyprus: Growth picks up pace in Q3

Annual growth quickened to 3.4% in the third quarter, according to detailed national accounts data released on 9 December (Q2: +3.0% year-on-year). The print was above the preliminary estimate of 3.2%. In seasonally- and working-day-adjusted quarter-on-quarter terms, the economy grew 0.4%, below Q2’s 1.0% increase.

Although domestic demand waned, a more upbeat external sector drove the third-quarter pick-up. Exports rose 1.1% on an annual basis in Q3 amid a rebound in overseas sales of goods, after having contracted in the previous two quarters (Q2: -6.3% yoy). Meanwhile, imports slipped 0.2% year-on-year, partly reflecting a softer demand environment at home (Q2: -4.1% yoy).

On the domestic front, private consumption held solid, expanding 3.5% year-on-year amid a tighter job market and improved consumer sentiment (Q2: +3.5% yoy). Moreover, government spending soared 29.3% in Q3 (Q2: +12.2% yoy), the most in over two decades. However, the highly volatile GDP component of fixed investment slowed again (Q3: +8.7% yoy; Q2: +14.2%), weighing heavily on demand.

Looking ahead, growth is projected to ebb next year largely on softer domestic demand. That said, the pace of expansion should remain solid, underpinned by firm consumer spending as real incomes continue to rise. A tourism industry weighed on by increased competition from other destinations, and the highly leveraged public and private sectors pose key risks to the outlook.

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