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The International Monetary Fund (IMF) has raised its forecast for Cyprus's economic growth in 2024 from 2.7% to 3.3%. This updated prediction comes from the IMF's October World Economic Outlook report released on Tuesday.
According to the report, Cyprus is expected to achieve a GDP growth rate of 3.3% in 2024, with a slight dip to 3.1% in 2025. This marks an increase from earlier estimates made in April, where growth was projected at 2.9%. Cyprus is poised to have the third-highest growth rate in the Eurozone next year, trailing only Malta at 5% and Croatia at 3.4%.
The Cypriot Ministry of Finance is even more optimistic, predicting a growth rate of 3.7% in 2024 and maintaining 3.1% for 2025 in its state budget. This positive outlook reflects confidence in the local economy's resilience and potential for expansion.
Inflation rates are also expected to remain manageable, with projections of 2.2% for 2024 and 2% for 2025, slightly adjusted from the earlier forecast of 2.3%. The unemployment rate is set to decline, with predictions of 5.3% in 2024 and 5.1% in 2025, compared to the previous estimates of 5.9% and 5.7% in April.
However, the IMF has revised its outlook for Cyprus's current account deficit, now expected to be -10.1% in 2024 and -8.6% in 2025. These figures are less optimistic than earlier forecasts, which projected deficits of -8.6% and -8.5% respectively. The Cypriot government expects a current account deficit of -8.5% for 2024 and -7.6% for 2025.
On a global scale, the IMF predicts steady but modest growth, with global growth remaining at 3.2% for both 2024 and 2025. Notable revisions include upgraded growth forecasts for the United States, now expected to grow by 2.8% in 2024. Meanwhile, major European economies like Germany have seen downgrades, with zero growth anticipated in 2024.
In conclusion, Cyprus appears to be on a positive trajectory, with higher growth forecasts indicating a rebound in economic activity. While challenges such as the current account deficit remain, the overall outlook suggests a robust economic environment for the island nation in the coming years.
