Cyprus economic growth and inflation for 2023 estimated at 3 per cent

Cyprus’ Gross Domestic Product (GDP) growth rate and inflation rate are expected to reach 3 per cent, respectively, for 2023, consistent with the predictions made in May, according to a report released on Tuesday by the University of Cyprus’ Centre for Economic Research.

The real GDP growth rate is expected to decelerate from 5.6 per cent in 2022 to 3 per cent in 2023, and further reduce to 2.9 per cent in 2024, according to the research.

Factors such as monetary tightening, high inflation in previous quarters, and the recent slowdown of growth in the eurozone are anticipated to impact Cyprus’s economic prospects.

Nevertheless, positive developments within Cyprus, such as resilient economic activity and a robust labour market, along with favourable international trends, including commodity price reductions and improvements in financial indices, are projected to support economic growth in 2023.

Despite these positive indications, the report warned that risks of a less favourable economic outlook persist, echoing the concerns expressed in the May edition of the centre’s report.

In terms of inflation, the Consumer Price Index is estimated to drop from 8.4 per cent in 2022 to 3 per cent in 2023 and further decrease to 2 per cent in 2024.

These projections have been primarily attributed to recent international commodity price declines, including oil prices, as well as the recent easing of domestic inflation and monetary tightening measures.

Moreover, the inflation forecast for 2023 remains unchanged from the May edition, while the projection for 2024 has been revised downward by 0.4 percentage points due to the significant lessening of inflation in Cyprus, as well as further international commodity price reductions during the second quarter of the year.

Finally, despite the aforementioned positive indicators, the report emphasised that the risks of higher inflation than anticipated continue to be a factor of concern.