NICOSIA, Aug. 1 (Xinhua) -- A series of economic indicators announced this week have shown a strong performance by Cyprus' economy, despite an adverse international environment.
"It is an indication of the resilience of the Cypriot economy and the ability of a small economy to react when difficulties arise," an official from the Economics Research Center at the state University of Cyprus said on Thursday.
The Center predicted stronger economic growth of 3.0 percent in 2024, 0.4 percentage units above its previous projection in April. It also predicted growth of 3.3 percent in 2025.
This compares with the 1.0 percent growth predicted by the European Commission for the European Union (EU), and 0.8 percent in the euro area, for 2024.
"This optimistic outlook is attributed to resilient demand, a tight labor market, easing inflationary pressures, and the gradual reduction of interest rates," the Center said in a report, which also projects inflation rates of 2.1 percent in 2024.
INFLATION SLOWS DOWN
A report by the Cyprus Statistical Service issued on Thursday said inflation slowed down in July, increasing by only 2.1 percent on a yearly basis.
This marked a deceleration from previous months, as inflation had increased by 2.9 percent in June, 2.7 percent in May, and 2.36 percent in April.
The most significant changes in economic categories compared to July 2023 were observed in agricultural products (6.7 percent) and petroleum products (4.1 percent). Month-on-month, the largest change was seen in agricultural products, with a 4.5 percent increase.
Compared to July 2023, the largest changes were noted in the categories of restaurants and hotels (5.4 percent), and food and non-alcoholic beverages (3.6 percent).
The retail trade sector, excluding motor vehicles, recorded robust growth in June 2024. The turnover value index increased by 5.5 percent compared to June 2023, while the turnover volume index rose by 3.2 percent over the same period.
According to preliminary estimates released by Eurostat on Wednesday, inflation in Cyprus dropped to 2.6 percent in July, reflecting a slowdown from the 3 percent rate observed in both June and May.
BETTER ECONOMIC PERFORMANCE
As a result of the better than expected economic performance, the government announced that its fiscal surplus had surged to 424.5 million euros (459.54 US dollars) in the January-June period, representing 1.3 percent of Cyprus' gross domestic product (GDP) of about 32.69 billion euros.
This compares with a surplus of just 62 million euros, or 0.2 percent of GDP, for the same period in 2023. The improvement is mainly due to a significant rise in government revenue, according to the Statistical Service of Cyprus (CYSTAT).
Cyprus' financial situation has improved significantly due to increased income from various taxes and contributions, despite higher spending in many areas, the analysts said.
Cyprus' economy is expected to be seriously impacted by the continued conflicts in Ukraine and in the Middle East, and also by high bank lending rates.
Russia and Ukraine provided almost 800,000 tourist arrivals, almost one third of the total, to the tourism sector. Tourism is the steam engine of the Cypriot economy, with a contribution of 21 percent to the GDP.
Nevertheless, the operators of the two international airports of Cyprus announced an increase of 4.5 percent in passengers in the first six months of this year compared to the same period last year, as visitors from Poland and other north European countries filled the void left by those from Russia and Ukraine. (1 euro=1.08 U.S. dollar)
