The European Commission’s winter forecast confirms the positive course of the Cypriot economy: real GDP will increase by 5.3% in the first nine months of 2021, and a further increase of 4.1% is projected in 2022.
According to a statement from the Ministry of Finance, the real GDP of Cyprus in 2021 recovered quickly.
“As a result, the losses caused by the 2020 pandemic crisis are expected to be fully recovered, which will increase confidence in the economic environment and strengthen the state’s position to support sustainable development through its commitment to prudent fiscal policy, with a focus on investment that promotes reforms.” .
The report said that the real GDP of Cyprus grew by 5.3% in the first nine months of 2021 compared to the same period last year.
Growth was driven by domestic demand supported by fiscal stimulus and service exports, including tourism.
From January to October 2021, tourism revenues reached 53% compared to the same period in 2019.
As a result, Cyprus real GDP is expected to grow by 5.3% by 2021.
The Commission forecasts that growth risks remain balanced.
While the number of COVID-19 cases has increased recently and consumer purchasing power has been eroded by high inflation, economic growth is expected to accelerate in the second quarter of 2022 due to high adult vaccination rates and limited COVID restrictions.
The Ministry of Finance said the outlook for the tourist season is positive, based on scheduled international flight data.Real GDP is projected at 4.1% in 2022, driven mainly by domestic demand, namely investment supported by the Recovery and Resilience Plan, and a small positive contribution from net exports.
In 2023, GDP growth is projected at 3.5%.
The commission said high energy prices were the main driver behind the 2.3% rise in inflation in 2021.
Their forecasts show that inflation will rise to 2.6% in 2022, which is still well below the European average of 3.9%.
De-escalation is expected in 2023 with a forecast of 1.2%.
It is also noted that the estimated GDP growth of Cyprus in 2021 is equal to the average for the Eurozone and the EU.
GDP growth will be marginally better in 2022 at 4.1% compared to 4.0% in the euro area and the EU and significantly higher in 2023 at 3.5% compared to 2.7% in the euro area and 2.8 % the weight.