CypERC: Economic activity expected to continue robust rates

08:18 - 26 April 2024

Economy Reporter

Real economic activity in Cyprus is expected to continue to expand at robust rates over 2024 – 2025, according to the Economic Outlook for April 2024 issue of the Economic Research Center of the University of Cyprus.

Noting that real economic activity in Cyprus is expected to continue to expand at robust rates over 2024 – 2025, it says that real GDP growth is projected to reach 2.6% in 2024 and to strengthen to 3.3% in 2025.

Compared to the January issue, it adds, the growth forecasts have been revised up, by 0.2 percentage points for 2024 and by 0.1 percentage point for 2025.

It notes that despite the relatively high borrowing costs and a significant slowdown in Cyprus’s trading partner economies, domestic activity and the labour market have remained resilient, fuelling growth in the following quarters.

The Economics Research Center says that domestic activity has been supported by falling inflation, a relatively tight labour market, recent increases in employee earnings, and ample fiscal space.

Inflation, it adds, (based on the Consumer Price Index) is projected to remain on a downward trajectory over 2024 – 2025. Inflation is forecast at 2.0% in 2024 and at 1.9% in 2025, lower by 0.1 percentage point in each year vis-à-vis the forecasts in the January issue, as domestic inflation eased further during the first quarter of the current year.

Risks to the outlook for growth and inflation stem primarily from increased geopolitical tensions, especially a possible escalation of the conflict in the Middle East, the economic performance of trading partner economies, and the future path of interest rates, it concludes.

(Source: CNA)

CypERC: Economic activity expected to continue robust rates

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