The Central Bank of Cyprus said that it revised its 2017 economic growth forecast to 3.1 per cent in 2017 from a 2.8 per cent growth rate in December, which slightly more optimistic than the finance ministry’s forecast.
The Cypriot economy, which grew 2.8 per cent in 2016, is expected to grow at a 3.2 per cent pace over 2018 and 2019, the central bank said in its June economic bulletin on its website on Friday.
“Private consumption is expected to further grow 2.3 per cent against a 2.9 per cent growth in 2016, reflecting mainly the increased disposable income, low interest rates, property-tax reduction, as well as improvements on the labour market and increased salaries,” the central bank said. Public spending is expected to increase 2.8 per cent after rising half as much last year mainly on the hiring of professional soldiers and salary rises in the public sector.
Fixed capital formation, already at historical lows, are expected to drop 15 per cent this year mainly on non-recurring investment in transport equipment such as vessels, offsetting the effect of various other private and public investment projects, the central bank said.
The Ministry of Finance forecast in April that the economy is expected to grow 2.9 per cent in 2017 and 2018 and 2.7 per cent in 2019.
The harmonised consumer price index is expected to increase 1.2 per cent this year after falling as much last year before it increases 1.3 per cent and 1.5 per cent in 2018 and 2019 respectively, the bank supervisor said.