University of Cyprus projects 3.1% growth rate in 2017


The Economics Research Centre of the University of Cyprus projects that the expansion of real economic activity in Cyprus is expected to continue in 2017 at slightly faster rates vis-à-vis those registered in 2016.

In 2017, real GDP is projected to grow by 3.1%. In the first quarter of 2017, real GDP is projected to rise (year-on-year) by 3.5% and in the second quarter GDP growth is forecasted at 3.1%. In the second half of 2017, real activity is forecasted to grow by 3.0% (year-on-year).

The contributing factors in the strong growth rates forecasted are given below.

Downside risks to the growth forecasts are discussed below.

Upside risks to the outlook relate to the economic recovery in Russia as oil prices and the rouble are rebounding. Moreover, public infrastructure projects and private investment decisions (related to e.g. energy, tourism, shipping, real estate) could boost the economy’s prospects.

The geopolitical situation in the Eastern Mediterranean involves both downside and upside risks to the outlook that may affect domestic activity primarily through tourism. In 2017, CPI inflation is forecasted to reach 1.7% as activity continues to expand and international oil and food prices continue to rebound. The projected inflation rate in 2017 also reflects base effects due to the relatively low general price level registered in 2016.