The Cypriot economy is forecasted to continue to post robust growth in 2018 and 2019. In 2018, real GDP is projected to increase by 3.9%. In 2019, growth is forecasted to moderate as real GDP is forecasted to expand by 3.3%.
The main drivers of the outlook in 2018 and 2019 include the recent strong economic performance in Cyprus, the supportive external environment, the low levels of interest rates and inflation, and the high levels of domestic and European economic sentiment.
The recent sale of the Cyprus Cooperative Bank and the newly introduced amendments to the legislations regarding insolvency and foreclosures, and the sale and securitization of loans, are expected to enhance the soundness of the banking sector, reduce uncertainty and restore depositors’ and investors’ confidence, with positive effects on economic activity.
In the first quarter of 2018, the Cypriot economy continued to perform strongly as real GDP increased by 4.0% year-on- year (y-o-y). All sectors of economic activity continued to expand in terms of their real gross value added except financial and insurance activities. As in 2017, construction remained the fastest-growing sector; output growth in manufacturing, trade and professional services outpaced the performance of the rest of the economy.
Many leading indicators of domestic activity (e.g. credit card use, index of industrial production, registrations of motor vehicles, registrations of new companies, property sale contracts, building permits) continued to perform favourably in the second quarter of 2018, although some indicators relating to tourism (e.g. arrivals, revenue) registered a slowdown.
Read more in the ministry of finance report here
