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Cyprus’ strong economic recovery-2018 Outlook

March 2018

Cyprus’ strong economic recovery will continue in 2018 with the GDP expected to be 3.2% (2017: 3.8%) which is well above the European Union average. Inflation forecast shows an increase in 2018 to 1.2% (2017: 0.7%) well within the healthy limits, with unemployment expected to be near the 10% mark in comparison with 13% of the year before.

Historic interest rates are at record lows for the country even though they remain one of the highest in the Eurozone. The rate for deposits of up to one year for households was down to 1.11% compared to 1.17% and for non-financial corporations was also down to 1.11% compared to 1.32% in December 2017.  Consumer loans rates are down in January to 4.09% compared to 4.20% in December being the fourth lowest in the Eurozone. Housing loans were up to 2.60% compared to 2.53% in December though.

The main pillars of recovery are to continue flourishing in 2018 with tourism expected to have yet another record year in tourist arrivals. 2017 witnessed an increase of 14.6% year on year and already January 2018 arrivals are more than 20% up from January 2017.

Real Estate showed encouraging signs during 2017 and 2018 has started brilliantly with a 55% increase in sales recorded in the first 2 months funneled by the successful Citizenship scheme.

At the same time gas exploration drilling continues in Cyprus’s exclusive economic area with ENI, EXXONMOBIL, TOTAL, SHELL and KOGAS planning to continue their drilling expeditions. ENI’s recent drill was successful announcing a promising gas discovery with EXXONMOBIL planning two exploration drillings within the first six months of 2018.

Furthermore, the introduction of the Betting Law and the establishment of the National Betting Authority has paved the way for the long awaited 7-star Hotel and Casino Resort to be built in Limassol as well as online betting companies. The Casino resort investment will be in the region of 550 million euro with ‘satellite’ casinos in other cities. The resort is expected to begin operations in 2021, with the satellite casinos within 2018. More than 11,000 jobs are expected to be created directly from this investment.

The construction of the Nicosia Mall is at its final stages and is expected to open its doors in late 2018. It will be the biggest Mall in Cyprus creating new jobs and opportunities with 135 shops 113,000 sq. meters.

While there are undoubtedly challenges ahead, the economy is growing well and businesses are looking forward with confidence. In summary, Cyprus is very much open for business.

Overall the economy has recovered from the 2013 recession showing healthy signs of growth and potential.

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