Central Bank of Cyprus: Economy to grow by 2.6% this year

NICOSIA, Cyprus (AP) — The economy of Cyprus is expected to grow by 2.6% this year, a full three points lower than the 2022 increase in the island's nation's gross domestic product, the governor of the country's central bank said Tuesday.

Governor Constantinos Herodotou said at an economic forum Tuesday that despite the slower growth rate, the forecast compares favorably with the average growth of 1% expected in other countries that use the euro.

Herodotou attributed the situation in Cyprus primarily to a decreased demand for loans because of high interest rates, as well as declines in personal consumption and investments.

The country's growth is predicted to rebound to 3.1% annually in 2024 and 2025 thanks to improved domestic demand, exports and tourism revenue, he said.

Cyprus' inflation rate dropped to 3.8% in April, significantly lower than its peak of 10.6% in July2022. Herodotou said annual inflation is projected to drop to 3.3% and to continue falling in the next two years, reaching 2.3% and 1.9% in 2024 and 2025, respectively.

The official said a stabilization of energy and food prices, as well as the European Central Bank’s monetary policy line, would help bring inflation down.