Insider / ΚΥΠΕ
Real GDP is expected to grow by 4.1% in 2022, according to the January Economic Outlook bulletin issued by the Center for Economic Research (JCC) of the University of Cyprus.
Real GDP is estimated to have grown by 5.6% in 2021, while inflation for 2022 is projected at 2.6%.
According to the JCC, factors contributing to the outlook for 2022 include the strong recovery from the 2020 pandemic crisis, strengthened economic confidence, favorable financing conditions and supportive fiscal policy.
As reported, the latest wave of the COVID-19 pandemic, although more aggressive in terms of infection growth, has not led to significant restrictions on economic activity, possibly weakening the link between economic growth and epidemiological conditions. However, it is reported, new variants of the virus leading to new waves of infections remain a major source of economic uncertainty and pose a significant downside risk to domestic and global prospects.
New waves of the pandemic, the JCC adds, could exacerbate supply chain problems and intensify upward pressures on prices, especially international commodity prices, limiting growth prospects. In addition, risks for a worse-than-expected outlook stem from the high level of debt in Cyprus and delays in implementing structural reforms. High levels of public and private debt, he notes, could make the Cypriot economy vulnerable to less loose financial conditions and changes in investor confidence. Delays in promoting structural reforms affect economic confidence and limit investment prospects.
“As economic and social activities further adapt to the pandemic, better-than-expected prospects are associated with stronger-than-expected domestic demand, but also external demand, mainly for tourism services,” the JCC said.
He also notes that the increasing vaccination coverage and the extensive and regular testing of the disease in the population, allow further normalization of activities, strengthening the economic prospects. It is also reported that investments and reforms, especially through the Recovery and Sustainability Plan for Cyprus, are expected to have a positive impact on production and employment.