MoF: Economy on positive course

The positive course of the Cypriot economy and its favourable prospects are confirmed by the European Commission’s winter forecast, says the Ministry of Finance, while noting that real GDP increased by 5.3% in the first ninth months of 2021 with a further increase of 4.1% projected in 2022.

According to a Ministry of Finance announcement, real GPD in 2021 in Cyprus recovered vigorously. Losses due to the pandemic crisis of 2020 are expected to be fully recovered, increasing trust to the economic environment and reinforcing the state’s position to support sustainable development through its commitment to prudent fiscal policy, with an emphasis on investments and promoting the necessary reforms.

Cyprus' real GDP has risen by 5.3% during the first nine months of 2021, in comparison to the same period last year, the announcement says. The growth came from domestic demand, that was supported by the fiscal stimulus, as well as exports of services, including tourism.

From January to October 2021 income from tourism reached 53% of the same period in 2019. Throughout 2021 Cyprus' real GPD is expected to rise in total by 5.3%.

According to the Commission’s forecast, the risks for growth remain balanced, is said in the announcement. Although the COVID-19 cases have increased recently and the consumer purchasing power has been eroded by high inflation, the economic growth is expected to accelerate in the second quarter of 2022, due to the high vaccination percentage of adult population and the limiting of the restrictions related to COVID-19.

Additionally, the Ministry of Finance reports that the prospects for the tourist season are positive, based on data from scheduled international flights. In 2022, real GDP is projected to increase by 4.1%, mainly due to domestic demand, namely investments that will be supported by the Recovery and Resilience Plan, and the small positive contribution from net exports. In 2023, growth is projected at 3.5%.

European Commission also reports that the main factor for the increase in inflation, set at 2.3% in 2021, were high energyprices. The projections show that inflation will go up to 2.6% for 2022, which is still significantly lower than the European average (3.9%). De-escalation is expected in 2023, with the forecast being 1.2%, the announcement adds.

It is also noted that the estimation for GDP growth in Cyprus, in 2021, is equal to the Eurozone and EU average, while it is projected to be slightly better in 2022, with 4.1% compared to 4.0% in the Eurozone and EU, and significantly higher in 2023 at 3.5%, compared to 2.7% in the Eurozone and 2.8% in the EU.