Cyprus economy is on the rise!

According to the European Commission’s summer forecast, the Cyprus economy in 2019 will grow by 2.9%, and in the next — by 2.6%. Investments in the first quarter of the year showed good growth, and bank lending to domestic non-financial companies is strengthening. Cyprus’s GDP increased by 3.9% in 2018, which was due to high domestic consumption and favorable demand for the export of Cypriot goods. Economic growth slowed in the first quarter of 2019 to 3.4%, reflecting weaker exports. “Consumer sentiment worsened in the first half of 2019, and business confidence has stabilized, which suggests that growth may be less vibrant in the coming months. Nonetheless, private consumption is expected to remain stable given the positive changes in the labor market, ”the report of the European Commission says. The unemployment rate in May fell to 6.5%, reaching the lowest level in eight years. One of the negative factors slowing down the growth of the Cyprus economy was the reduction in the number of tourists. According to the EU: “one of the pillars of the Cypriot economy — tourism — shows signs of weakness. In the first five months of 2019, the number of arriving tourists decreased by 1.1% compared to the same period in 2018. This interruption of the long upward trend is partially due to the bankruptcy of some airlines serving Cyprus, as well as a slowdown in tourist demand. But tourism revenues in the first quarter are also estimated to have fallen by 3.1% compared to the corresponding period in 2018, probably due to more intense competition. ” Inflation will remain low. After a more notable rise in prices in January, when inflation exceeded 2% year on year, the Harmonized Consumer Price Index (HICP) fluctuated around 1% from February to April, and then fell in May. The main factor behind low inflation was the price of non-energy goods, whose value continued to fall compared to last year. The contribution of most other HICP components, in contrast, was positive. However, lower oil prices will help reduce inflation in the second half of 2019 to an annual level of 0.5%, and on average inflation will be 0.9% in 2020.