Cyprus is among the four countries in the Eurozone with the highest growth rate, says the Ministry. Finance
In today's announcement, the Ministry of Finance notes that the forecasts for real GDP are higher for both 2023 and 2024 compared to the corresponding autumn forecasts.
The resilience of the Cypriot economy is demonstrated by the winter forecasts issued on Monday by the European Commission, reports the Ministry of Finance, adding that Cyprus is among the four countries in the Eurozone with the highest growth rate and twice the rate of the average of both the EU and Eurozone, reports the Ministry of Finance.
In today's announcement, the Ministry of Finance notes that forecasts for real GDP are higher for both 2023 and 2024 compared to corresponding autumn forecasts.
“Although some slowdown in economic growth is expected for 2023, this slowdown has decreased from the 1% that was based on the autumn forecast to 1.6%. For 2024, the acceleration of economic growth is estimated at 2.1% from 1.9% based on the autumn forecasts”, it states.
As the Ministry of Finance notes, Cyprus is among the four countries in the Eurozone with the highest growth rate and twice the rate of the average of both the EU and the Eurozone (0.8% and 0.9% respectively), which demonstrates the its resilience and ability to adapt to difficult economic situations as well as challenges.
For 2024, forecasts for the acceleration of the Cypriot economy have increased in contrast to the EU and the Eurozone where they remained unchanged (1.6% and 1.5% respectively), it is reported.
In relation to 2022, the Ministry of Finance points to the Commission's reports that despite rising inflation, private consumption remained strong, supported by employment and wage growth, and supported by the Government's targeted measures to offset high energy prices, while tourism also played an important role, with arrivals recovering ground lost during the pandemic and reaching 80% of 2019 levels.
“The Commission estimates real GDP growth at 5.8% for 2022, which is 0.2 percentage points higher than the autumn forecast,” it notes.
Furthermore, the Ministry of Finance points out that the improved economic outlook among Cyprus' trading partners will further support tourism, which is expected to reach almost 2019 levels, while the automatic 50% indexation of wages, implemented in January 2023 , is expected to support purchasing power somewhat.
“However,” it says, “rising interest rates are expected to negatively impact corporate investment and housing construction,” it says.< /p>
Finally, in terms of inflation, it is noted that after 8.1% in 2022, it is projected to decrease over the forecast horizon, as the fall in natural gas and oil prices reduces energy inflation and supply disturbances weaken further. Overall, inflation is forecast to hold at 4% in 2023 and 2.5% in 2024.