EBRD: Cyprus' GDP to fall by 6.0% in 2020

Economies across the EBRD regions may contract on average by 3.5 per cent this year, with a rebound of 4.8 per cent possible in 2021, according to an EBRD report released today. EBRD is warning that the projections are subject to “unprecedented uncertainty”.

EBRD  states that "EU members in south-eastern Europe were also likely to be severely affected by the coronavirus crisis, with a major channel for disruption coming from tourism, especially in Cyprus, Greece and Bulgaria."

More specifically EBRD reports on Cyprus that "in the baseline scenario, we expect GDP to fall by 6.0 per cent in 2020, with a rebound of 5.0 per cent in 2021", as "in March 2020, the government announced a financial support package €700 million."

According to the EBRD, "in 2019, GDP growth in Cyprus decelerated moderately but remained robust at 3.2 per cent."

"Investment, particularly in the construction sector, was one of the main drivers of growth", the report states.

"Private consumption also remained resilient throughout the year given the strong economic sentiment and improving market conditions. Unemployment stood at 6 per cent in January 2020, seven percentage points below the 2014 peak. Despite the robust recovery observed over several years, Cyprus is going to be heavily hit by the consequences of the coronavirus pandemic", reads the EBRD report.

Furthermore, "the closure of the borders and the measures to reduce contagion have brought construction and tourist arrivals to a halt. Given the country’s exposure to travel and tourism (around 14 per cent of GDP) and the traditional role of investment and financial services in supporting growth, the impact of the coronavirus crisis is expected to last for some time."

"The extent of the recession in 2020 will thus be highly dependent on the duration of restrictions on movement of people in the UK and Russia, which together account for about half of annual tourist arrivals. It will also be dependent on the capacity of the government to implement financial support measures", the report concludes.

Greece will also suffer a fall in GDP "of 6.0 per cent in 2020 because of the economic impact of the coronavirus pandemic", the European Bank for Reconstruction and Development (EBRD) says in its latest macroeconomic forecast published today. The Bank expects the country to recover rapidly in 2021 with GDP growth of 6.0 per cent.

In Turkey, growth is likely to be heavily impacted by the coronavirus pandemic in 2020. We expect GDP to contract by 3.5 per cent in 2020, followed by a robust recovery to 6.0 per cent growth in 2021. There are significant risks surrounding this forecast, which is heavily dependent on the duration and extent of the social distancing measures.