Cyprus: GDP growth records best result in nearly two years in Q2
GDP reading: According to a preliminary reading, GDP growth ticked up to 3.6% year on year in the second quarter from 3.5% in the first quarter, marking the strongest expansion since Q3 2022. On a working-day and seasonally adjusted quarter-on-quarter basis, economic growth slowed to 0.7% in Q2 from the previous period’s 1.0% expansion, marking the softest growth since Q2 2023.
Drivers: The flash estimate did not include a detailed breakdown. Instead, the statistical office stated that the hospitality, wholesale and retail, IT and communication, and construction sectors supported growth. Meanwhile, monthly data suggests that the external sector was yet to fire on all cylinders: Goods exports rebounded in Q2, but growth in tourist arrivals slowed sharply compared to Q1.
A full breakdown is set to be released on 2 September.
Panelist insight: Analysts at the EIU commented:
“Inflation and financial conditions have started to ease, and this will support private consumption and investment, especially from the middle of this year if, as we expect, ECB policy rates fall further. External demand has been weak owing to global headwinds and tight financing conditions in Cyprus’s main EU trading partners, but should start to pick up gradually, supported by monetary policy easing and further growth in Cyprus’s important tourism sector.”