Economy continues upward trend according to predictions, FinMin says

The Cypriot economy is continuing its upward trend and unlike other European countries which are entering a recession, Cyprus recorded the second-highest GDP growth rate in the Eurozone, after Spain, during the first half of the year, the Ministry of Finance says.

The Ministry issued a press release commenting on reports 'that present a negative picture regarding the prospects of the Cypriot economy', stressing that statements and comments that are not accurate do not contribute in any way to correct information. 

"The Cypriot economy continues its upward trend, in accordance with the forecasts of the Ministry of Finance. Unlike other European countries, which are entering recession, Cyprus, during the first semester, recorded the second highest GDP growth rate in the Eurozone, after Spain," the Ministry stresses.

In addition, it says that inflation in Cyprus in July dropped to 2.4%, which is the fourth lowest inflation in the Eurozone and is one of the few countries that maintains fiscal surplus.

It adds that according to the Fiscal Council's Interim Report, "the Cypriot economy continues to record significant resilience despite the ongoing uncertainty, with growth expected to remain close to 2.5%".

In its press release, the Ministry says that the slowdown of the economy's growth rate was predictable, and started in the 1st quarter of 2022 adding that this is due to external factors such as the effects of continuous interest rate increases by the ECB, high prices in consumer goods and also due to of the effects in the service sector of the Cypriot economy from the implementation of sanctions against Russian entities.

Moreover, it notes that the slowdown of growth in 2023 has been predicted and is reflected in the forecasts of the Ministry of Finance where it is estimated that the growth rate will be slightly below the predicted 2.8%.

It says that in light of the above, the fiscal policy framework takes into account the developments in the Cypriot economy and in particular its predicted slowdown.

The Ministry adds that public finances results for the first half of 2023, despite the slowdown of the economy, are compared favorably with the results of the corresponding period of 2022 since there is no deterioration of the state's fiscal position.

On the contrary, the Ministry stresses, fiscal performance for all months without exception in 2023 is better than that of 2022.

Furthermore, it notes that the potential of the Cypriot economy, as presented above, and the sound fiscal and financial framework, are solid foundations for the implementation of the economic governance program.

The government, it notes, is closely monitoring developments regarding the Cypriot economy and is ready to address any negative developments that may arise and lead to a deviation from the Ministry's forecasts.

(Source: CNA)