18.07.2022
The European Commission has revised its summer forecasts for Cyprus real GDP growth in 2022 upward by 3.2%, almost one percentage point above its spring forecasts, while it estimates real GDP at 2.1% for 2023 year, the statement said. Ministry of Finance.
The Ministry of Finance notes that “Cyprus is among the countries with the third largest upward revisions in 2022.”
Meanwhile, the European Commission forecasts that inflation is expected to rise to 7% in 2022 and then slow to 3.3% in 2023.
The ministry said in a statement that according to the European Commission’s summer forecasts released on Friday, the Cypriot economy “surprised positively in the first quarter of 2022”.
It adds that Cyprus’ real GDP growth in 2022 is above the average for both the EU and the Eurozone, which it highlights “demonstrates the strong fiscal position that started the year, its resilience and ability to adapt to difficult economic conditions.” . “.
“Despite the difficult global economic climate, the economy has been moving higher as a result of a faster-than-expected recovery in tourism and the continued expansion of exports of other services, especially business services and information technology,” the ministry said.
It notes that the main growth drivers are expected to be domestic demand and, to a lesser extent, net exports of services.
According to the ministry, investment, especially in the construction sector, is expected to be affected by a gradual tightening of economic conditions, disruptions in the supply chain and extremely high prices for building materials.
However, it is added, on the positive side, that the implementation of the Cyprus Recovery and Sustainability Plan is expected to support the investment.
As for private consumption, the Ministry of Finance expects it to be negatively affected by high inflation and a decline in purchasing power, although household incomes, it notes, are “supported by measures taken by the government to address high energy prices and partial wage indexation will be implemented in January 2023.”
For 2023, the ministry reports that growth estimates have declined in all countries and reflect a longer period of recovery from the crisis.
Regarding the European Commission’s inflation forecasts of 7% in 2022 and 3.3% in 2023, the ministry says the European Commission expects the high prices seen this year due to higher energy costs to not continue but to decline gradually next year as commodity markets improve.
In addition, the Ministry of Finance said that the inflation forecast for Cyprus is the 5th lowest in the Eurozone and below the EU and Eurozone average.
