GDP growth improves in Q3

Economy accelerates to a near two-year high: According to a flash release, GDP growth edged up to 3.9% year on year in the third quarter from 3.7% in the second quarter, marking the strongest expansion since Q4 2022. On a working-day and seasonally adjusted quarter-on-quarter basis, economic growth accelerated to 1.0% in Q3 from the previous period's 0.1%.

Services sector likely supporting the improvement: The preliminary estimate did not include a comprehensive breakdown, but the statistical office stated that the hospitality, wholesale and retail, IT and communication, and construction sectors underpinned growth. Meanwhile, monthly data indicates that the external sector’s performance was mixed: Goods exports shrank by over 20% in Q3 (Q2: +9.5% yoy), while growth in tourist arrivals accelerated relative to Q2. A detailed breakdown is set to be released on 2 December.

Panelist insight: Analysts at the EIU commented: “Strong growth in Cyprus in the coming quarters will be underpinned by ECB easing, with further easing ahead in 2025. This will increase consumer and corporate credit demand and reduce household interest payment burdens, freeing up disposable income for discretionary spending elsewhere.”

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