Cyprus’ GDP is expected to grow by 3.2 per cent in 2025, slightly lower than the figure of 3.4 percent reported for 2024, according to the Central Bank of Cyprus (CBC).  This figure was included in the CBC’s latest macroeconomic forecasts for the period 2025-2027, which were released on Monday.  The forecasts cover a number of key indicators such as Gross Domestic Product (GDP), unemployment, inflation, and core inflation (excluding energy and food).  The forecast also includes an analysis of potential deviations from the baseline scenario for both GDP and inflation.  Beyond the current year, the CBC reported that the Cypriot economy is projected to grow by 3.1 percent annually during the period from 2026 to 2027.  This GDP trajectory is primarily attributed to the expected increase in domestic demand, with a smaller contribution from external demand, considering the heightened uncertainty in the global geopolitical and trade environment.  Private consumption is expected to support domestic demand due to the anticipated rise in real disposable income and the continued resilience of the labour market.  Although the growth rate of private consumption is projected to slow down in the coming years, it will remain a key driver of economic growth.  Additionally, significant contributions to domestic demand are expected from ongoing large non-residential private investments, infrastructure projects supporting the digital and green transition, and other reform projects under the Recovery and Resilience Plan.  Based on the latest available data, no significant negative impact has been observed on investments from the conflicts in the Middle East or from the restrictive monetary policy, which has weakened due to interest rate cuts and is expected to have a delayed effect.  The construction sector also continued to be a significant engine of economic growth throughout 2024.  For the period 2025-2027, GDP growth is also expected to be supported by net exports, particularly from the technology sector and increased exports of intellectual property services.  Furthermore, the growth rate is bolstered by the rise in turnover in the financial and professional services sector, partly due to the diversification of relevant export markets, as well as the ongoing positive contribution of the shipping sector.  Despite some negative impact from geopolitical uncertainty on external demand, this is mitigated by the resilience and adaptability of the services exports sector in response to various negative shocks.  Moreover, net exports are supported by positive developments in tourism, with fewer Israeli tourists lost than initially expected due to the ongoing Middle Eastern conflict.  The tourism sector is also benefiting from the continued diversification of Cyprus’ tourism offering towards markets with high per capita spending.  When compared with December 2024 forecasts, the GDP growth rate has been revised upwards by 0.1 percentage points for 2025 due to a base effect.  This is mainly because of slightly lower-than-expected economic growth in 2024, which was affected by a month-long strike in the concrete production sector, temporarily impacting the construction sector.  No revisions have been made for the following years, reflecting continued economic resilience and a downward trend in unemployment.  What is more, the CBC said that the labor market continues to support the Cypriot economy, with significant resilience.  Unemployment decreased to below 5 percent of the labor force in 2024, compared to 5.8 per cent in 2023.  This aligns with positive trends recorded in the European Commission’s surveys on employment expectations over the next three months and the continued decline in registered unemployment.  With GDP growth expected, unemployment is forecasted to decrease further to 4.7 per cent in 2025-2026 and to 4.6 per cent by 2027, reaching conditions of full employment.  Compared to December 2024 forecasts, there is a minor downward revision of 0.1 percentage points in the unemployment rate for 2025, due to slightly lower-than-expected unemployment levels in 2024.   (ICE BEIRUT)

Fonte notizia: Cyprus Mail