Daily Times

NICOSIA: The Central Bank of Cyprus (CBC) has revised upwards economic projections for the eastern Mediterranean island, expecting growth over the next three years to be an annual average of 3.0 percent.

CBC’s December Economic Bulletin, the last for this year made available on Friday, said recent economic indicators, especially for tourism, have shown a more positive trend than expected. As a result, this year’s growth has also been revised up, with the gross domestic product (GDP) expected to rise close to 2.8 percent.

From 2017 through 2019, the country’s GDP growth is projected to be 2.8 percent, 3.0 percent and 3.0 percent, respectively. Cyprus was bailed out in 2013 and returned to growth in the fourth quarter of 2015. Its economy has been on the rise after recovering from a deep recession that lasted 12 consecutive quarters.

The central bank bulletin said increasing consumer demand deflation that lasted more than three years will revert to inflation, which is expected to rise to 0.9 percent, 1.5 percent and 1.6 percent for 2017, 2018 and 2019, respectively. The bulletin also said that as a result of more marked positive economic developments, employment will rise 2.1 percent this year and also for each of the next three years.

Unemployment, which has been the country’s largest economic problem in recent years, is expected to fall to a single-digit number in two years.

“Unemployment will be milder than the projections of Cyprus’s international lenders, mainly as a result of a fall in the number of foreign workers, the recovery of employment and the flexibility shown by the labor market,” the CBC bulletin said.

Unemployment is projected to fall to 10.7 percent in 2017, and further to 8.8 percent in 2018. The increase in employment is expected to lead to a gradual rise in salaries in the private sector starting in 2017. Public sector workers will see an end to salary cuts that were imposed at the beginning of the economic crisis, but fringe benefit cuts will be retained.