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Cyprus GDP improves in Q3, in step with Europe

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The Cyprus economy is improving in step with that of Europe, as the latest statistics show.

Cyprus GDP in the third quarter of this year contracted at -4.4 per cent for the same period in the previous year, a 9.4 per cent improvement from the previous quarter, as data from Eurostat, the statistical office of the European Union, revealed on Friday. For the Euro area, the contraction was at -4.4 per cent, while the EU’s GDP saw a -4.3 per cent contraction from the third quarter in 2019.

Economists in Cyprus agree that the bounce back from the low numbers in the second quarter may be short-lived. “There has been a recovery from the low numbers seen in the second quarter, although this is still the flash estimate which may be revised lower,” comments George Syrichas, advisor to the Economic Research Centre at the University of Cyprus and a former Cyprus Central Bank board member.

Robust retail sales were an important driver of recovery in the quarter, Syrichas said, “while slack tourism had a significant negative effect.”

“But, because we have a surge in the virus and the partial lockdowns we’ve seen recently may lead to a less robust performance in the fourth quarter. We are still forecasting a contraction of about six per cent for the entire year,” he added.

Again, this seems to be in step with the rest of Europe. “GDP recovered more quickly than expected in the third quarter of this year,  with retail sales in particular bouncing back, but lockdowns may prompt fresh declines in activity in Europe in the fourth quarter, says Fitch’s Economics team in an update of its global GDP forecasts.

Meanwhile the number of employed persons increased by 0.9 per cent in both the euro area and in the EU in the third quarter of 2020, compared with the previous quarter. These were the strongest increases observed since time series started in 1995. In the second quarter of 2020, employment had decreased by 2.9 per cent in the euro area and by 2.7 per cent in the EU.

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