The European Commission has revised, in its summer forecasts, Cyprus’ real GDP growth in 2022 to 3.2% upwards, which is almost one percentage point higher than its spring forecasts, while it estimates real GDP at 2.1% for 2023, according to a statement by the Ministry of Finance.
?he Finance Ministry notes that “Cyprus is among the countries with the third highest upward revision of its forecasts in 2022”.
Meanwhile, according to the European Commission’s forecasts, inflation is expected to rise to 7 per cent in 2022 and then slow down to 3.3 per cent in 2023.
In the statement the Ministry said that according to the European Commission’s summer forecasts released on Friday the Cypriot economy “surprised positively in the first quarter of 2022”.
It adds that Cyprus’ real GDP growth in 2022 is above the average for both the EU and the Eurozone, which, it stresses, “demonstrates the strong fiscal position with which the year started, its resilience and its ability to adapt to difficult economic conditions”.
“Despite the difficult global economic climate, the economy moved upwards as a result of a faster-than-expected recovery in tourism and the continued expansion of exports of other services, especially business services and information technology,” the Ministry underlines.
It notes that the main drivers of growth are expected to be domestic demand and, to a lesser extent, net exports of services.
Investment, particularly in the construction sector, is expected to be affected by the gradual tightening of economic conditions, supply chain disruptions and extremely high prices of construction materials, according to the Ministry.
Nevertheless, it is added, on the positive side, the implementation of the Cyprus Recovery and Resilience Plan is expected to support investment.
As regards private consumption, the Ministry of Finance says it expects it to be negatively affected by high inflation and erosion of purchasing power, although household income, it notes, “is supported by the measures taken by the government to address high energy prices and the partial wage indexation to be implemented in January 2023”.
In relation to 2023, the Ministry says that the growth rate estimate has declined in all countries and reflects the longer recovery period from the crisis.
Regarding the European Commission’s forecasts for 7% inflation in 2022 and 3.3% in 2023, the Ministry says that the European Commission expects that the high prices seen this year due to higher energy costs will not persist, but will gradually decline next year as the situation in commodity markets improves.
In addition, the Ministry of Finance said that the inflation orecast for Cyprus is the 5th lowest in the Eurozone and below the EU and Eurozone average.
Source: Cyprus News Agency