A review of its forecasts for the growth of the Cypriot economy in 2021, at 3.7% of GDP, was carried out by the Center for Economic Research of the University of Cyprus, which also estimates that the contraction of the Cypriot economy was smaller than expected in 2020 and ranged at -5.7% of GDP.
The smaller contraction in economic activity in 2020, according to the JIT, is due to the fact that the improvement in economic activity that followed the lifting of the restrictive measures, which were implemented in the spring, was stronger than expected.
In addition, the JIT states that the forecast for 2021 has been revised downwards due to the outbreak of the pandemic in the last months of 2020 and the tightening of restrictive measures, while emphasizing that “the risks for worse than predicted prospects prevail”.
In relation to inflation in 2021, the JIT forecasts to increase to 0.8% from -0.6% in 2020, as economic activity is expected to recover.
Potential risks, according to the JCC, “stem from the imposition of stricter restrictive measures to stop the pandemic and in particular the new ban in January”, while additional risks arise, as he emphasizes, “from any delays in the availability of vaccines and vaccine programs in Cyprus and in the EU, as well as a new wave of infections due to mutations in the virus “.
“Slower pace of vaccinations and / or a new outbreak could delay the reactivation of sectors of the economy and slow down the recovery of domestic activity and external demand, especially demand for tourism services,” he said.
Other risks for the outlook, according to the University of Cyprus JCC, “are related to possible pressures on public finances and possible re-escalation of non-performing loans while the pandemic persists.”
“Further delays in implementing structural reforms (eg judiciary, public administration, local authorities) may undermine the country's credibility, limit access to EU funds and affect growth prospects,” the JCC concluded.
Philenews / ΚΥΠΕ