23.09.2022
Ratings agency DBRS Morning Star has once again revised its forecast for the growth of the Cypriot economy downward amid more gloomy forecasts for global growth, taking into account soaring inflation and heightened uncertainty due to the war in Ukraine.
In its updated forecasts, the agency cut Cyprus’s growth outlook for this year by 0.2 percentage points to 3.2%, while its growth forecast for 2023 was cut by 0.7 percentage points to 2.8%. In its June forecast, DBRS Morning star said it expects growth of 3.4% and 3.5% in 2022 and 2023, respectively.
“Underlying forecasts are getting increasingly bearish, especially the outlook for 2023,” the agency’s update said, adding that high inflation, energy and labor shortages, and rising interest rates were key drivers of the bleak global outlook.
DBRS also noted that near-term inflation risks are skewed to the upside, but central bank actions will begin to have a greater impact over the next few quarters.
The agency forecasts that the US economic growth rate will reach 0.9% in 2023, while the outlook for Europe has also deteriorated sharply due to the prospect of energy shortages this winter, and the UK economy is expected to contract by 0.1%.
“Recession risks are elevated and asset prices could come under increasing pressure, but financial stability risks appear to be contained,” the agency added.
DBRS Morning Star plans to publish a rating action on the Cypriot economy on October 7th.
