05.01.2022
The Cypriot economy in 2021 recovered the output lost during the COVID crisis and will continue to grow at an average of 3.7% of GDP in 2022-2024, the Central Bank of Cyprus predicts. According to his study, the risks to the base case are balanced, although slightly overestimated in relation to inflation.
The central bank said that after a 5.2% decline in GDP in 2020, the economy is projected to recover with growth of 5.6% in 2021, followed by growth rates of 3.6%, 3.7% and 3 .8% of GDP in 2022, 2023 and 2024 respectively. The document says that domestic consumption and net exports are the sources of growth in the recovery, and unemployment is forecast to fall further, which is estimated to fall to 5.6% by 2024.
In addition, the CBC forecasts significant inflation growth, estimated to reach 2.2% in 2021 and 2.5% in 2022, mainly due to significant increases in energy prices and supply issues. Inflation is expected to ease in the coming years, with the CPI estimated to fall to 1.2% in 2023 and 1.5% in 2024.
On tourism, the CBC said the sector’s performance in 2022 will be better than originally anticipated, with tourist arrivals in the first ten months of 2021 reaching 46% of pre-COVID levels.
“The challenge for the coming years, and especially for 2022, is a formidable one amid the uncertainty surrounding the course of the pandemic, although a robust recovery is projected and tourism is estimated to return to pre-COVID levels in 2024.”
As for loans for the unemployed, the CBC said they remained stable at around 5 billion euros in the first eight months of 2021, following a decline seen in 2020 during the COVID pandemic.
However, the CBC indicated that NPLs transferred from banks’ balance sheets continue to put pressure on the real economy, noting that “reducing private debt is seen as especially important.”
