Cyprus economic prospects for 2025 revised upwards

International rating agency, Morningstar DBRS this week slightly downgraded its estimates for Cyprus’ economic growth in 2024 to 2.4 per cent, compared to the 2.5 per cent forecasted in December.

However, it significantly upgraded the growth projection for 2025, raising it to 2.4 per cent from the previous rate of 2 per cent it originally forecasted in December 2023.

The agency’s updated assessments in March 2024 also indicate a further reduction in unemployment in Cyprus to 6.1 per cent from the previously anticipated 6.4 per cent by December.

Elsewhere, the agency noted that the global economy still faces some downward risks, including geopolitical tensions, electoral uncertainties, especially concerning the US, and increasing damages from trade disputes.

“Nevertheless, with inflation easing, most central banks have room to cut interest rates if adverse disruptions in demand occur,” the agency said.

In more detail, the agency highlighted that growth expectations for the US have significantly improved since its last update in December, now forecasted at 2.1 per cent for 2024, a notable upgrade from the weak 0.6 per cent average prediction just six months ago.

Regarding Europe, it stated that most major economies are expected to remain in weak growth, below 1 per cent in 2024, excluding Spain and several other smaller eurozone economies.

Moreover, the agency noted mixed revisions for Europe, slightly negative for major economies in 2024 (Germany, France, and the United Kingdom).

Germany is expected to grow by just 0.1 per cent in 2024 (down from 0.4 per cent estimated in December 2023) and by 1.1 per cent in 2025, while France is expected to grow by 0.7 per cent in 2024 (down from 0.8 per cent estimated in December) and by 1.3 per cent in 2025.

The agency also revised Greece’s growth to 1.5 per cent in 2024 (from 1.3 per cent in the previous estimate) and to 2.3 per cent in 2025 (from 2 per cent previously estimated).

Additionally, Japan’s growth has been revised downward to 0.7 per cent in 2024 and 1.1 per cent in 2025, and Chinese growth to 4.6 per cent and 4.4 per cent in 2025, respectively.

Finally, the agency stated that except for the US, which is expected to slow in terms of growth, most major economies are projected to experience stronger growth in 2025.