The International Monetary Fund said the Cypriot economy is projected to recover at a much slower pace in 2021, revising its previous projections as the Covid-19 pandemic continues to hamper economic activity.
In its World Economic Outlook (WEO), the IMF estimates that following a more modest contraction amounting to 5.1% in 2020, the Cypriot economy will grow by 3% in 2021 compared the previous projections of 4.7% in the October 2020 WEO.
The IMF estimates that the Cypriot economy will mark strong growth in the last quarter of 2021 with an estimated 5.1% of GDP compared with the fourth quarter of 2020.
In 2022, the Cypriot economy will grow with a 3.9% rate, the IMF added.
The IMF’s new projections came as the Cyprus Finance Ministry revised its estimates for a 3.5% growth in 2021 from its previous projections of 4.5%.
According to the IMF’s WEO unemployment is projected to remain broadly stable to 7.5% in 2021 from 7.6% and it is estimated to decline to 7% in 2022.
Inflation will reach 0.5% in 2021 from -1.1% in 2020 and will rise further to 0.8% in 2022.
Cyprus’s current account deficit will reach 8.5% in 2021 from 10.3% the year before and will decline to 6.1% in 2022, the IMF added.
The Fund said “high uncertainty surrounds the global economic outlook, primarily related to the path of the pandemic.”
“Future developments will depend on the path of the health crisis, including whether the new COVID-19 strains prove susceptible to vaccines or they prolong the pandemic,” the IMF said.