During the 2023 Annual General Meeting of the Cyprus Bankers Association, the Minister of Finance, Mr. Makis Keravnos, discussed the current state and future prospects of the Cyprus economy, particularly focusing on the banking sector. The Minister highlighted that the country's economic growth remains robust, with gross domestic product (GDP) projected to continue at a positive pace of around 2.8 percent. This growth rate is three times higher than the Eurozone average, set at 1 percent.
Mr. Keravnos acknowledged the challenges posed by rising interest rates, which have been discouraging investment, and the persistent issue of high structural inflation, currently at around 4.9 percent. Despite the current inflation level being slightly above 3 percent, it is expected to close at 3.2 percent in 2023 and 2.5 percent in 2024. The Minister emphasized that inflation erodes household disposable income, contributing to the deceleration of GDP growth. However, he reassured that the growth rate remains comparatively strong, estimated to be around 3 percent in 2024.
On the fiscal front, Cyprus maintains a surplus in its fiscal balance, projected to reach an average of 2.3 percent of GDP from 2023 to 2026. Public debt is expected to decline from 86.5 percent of GDP in 2022 to 81.1 percent by the end of 2023. Furthermore, it is anticipated to continue its downward trend, aiming to reach 60 percent by 2026. In terms of employment, unemployment is projected to steadily decline, approaching 5 percent by 2026.
The Minister's comprehensive overview painted a positive economic outlook for Cyprus, highlighting fiscal stability and favorable growth prospects.
[Information sourced from Kathimerini CY]
