IMF forecasts economic challenges for Cyprus in 2023 and beyond

The International Monetary Fund (IMF), in its "World Economic Outlook" for October, published on Tuesday, forecasts that Cyprus's growth rate for 2023 will slow down to 2.2% of GDP, down from the 2.5% it had projected in its April outlook. For 2024, the IMF forecasts a growth rate of 2.7%, instead of 2.8%.

Additionally, the IMF expects that the growth rate for the fourth quarter of 2023 will be 1.8%, while inflation will fall to 3.5% in 2023, compared to the 3.9% projected in April's outlook. For 2024, inflation is projected to be at 2.4%, instead of 2.5%.

The unemployment rate in Cyprus is forecasted to increase slightly to 6.7% for 2023, compared to 6.5% in the last projection, and to increase to 6.4% in 2024, again revised upwards compared to the 6.2% of April's outlook.

The current account deficit is expected to be at 8.6% for 2023, up from 7.8% in April, and the IMF forecasts that it will be 7.9% in 2024, compared to the 7.2% it projected in April.

Regarding the eurozone, the IMF projects a growth rate of 0.7% for 2023 and 1.2% for 2024, while inflation is expected to drop to 5.6% in 2023 and 3.3% in 2024. The IMF projects the eurozone's unemployment rate to stand at 6.6% in 2023 and at 6.5% in 2024.

Furthermore, the IMF forecasts global growth to slow from 3.5% in 2022 to 3% in 2023 and 2.9% in 2024, well below the historical average of 3.8% (2000–19).

Advanced economies are expected to slow from 2.6% in 2022 to 1.5% in 2023 and 1.4% in 2024. On the other hand, emerging markets and developing economies are projected to have a modest decline in growth from 4.1% in 2022 to 4% in both 2023 and 2024.

Global inflation is forecast to decline steadily, from 8.7% in 2022 to 6.9% in 2023 and 5.8% in 2024. Core inflation is generally projected to decline more gradually, and inflation is not expected to return to the target until 2025 in most cases.