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HB Cypriot Economy Expected to Grow by 4.2% in 2018
April 25, 2018
Hellenic Bank estimates that the Cypriot economy will grow at a rate of 4.2% in 2018. Growth is expected to be supported by private consumption and investment and by an improving and robust labour market. Unemployment is expected to decline to 9.2% in 2018, while inflation to remain at relatively low levels, at around 0.5%.
In its Economic Review, the Department of Economic Research, notes that the recovery phase has passed and the economy is now entering its growth phase. In absolute terms, the value of all final goods and services produced domestically at constant prices, i.e, real GDP, stood at €16.6 billion recovering to the pre-crisis level. Correspondingly, nominal GDP, the value of all final goods and services produced domestically at current prices, reached € 19.2 billion in 2017, up from € 18.2 billion in the previous year. Τhe Economics Research Department notes that what is encouraging for the new growth phase, helping to avoid the repeat of the boom-bust cycle experienced in the economy in the past, is that the recent economic performance has not been driven by government through public spending and the related multiplicative role, nor is it funded from unsustainable credit-fuelled consumption as observed in the pre-crisis period.
In the Economic Review for the first quarter 2018, the Economic Research Department states that while consumption continued to be a key recovery driver, investment demand also rebounded, particularly for large construction and infrastructure projects. The main factor driving the increase in private consumption was the rise in labor income, which was a result of the growth in the number of employed people, rather than higher wages. As explained in the report, private consumption was also supported by the flourishing tourism sector with positive spillover effects in other sectors of the economy.
Source: Gold News Cyprus