By Stelios Orphanides
The European Bank of Reconstruction and Development (EBRD) said that it had revised its forecast for the Cypriot economy to 3.2 per cent for 2018 from a previous 2.5 per cent.
In 2019, economic growth is expected to slow down to 3 per cent, the EBRD said in a statement on its website on Wednesday.
“However, the legacies of the crisis, such as high public and private sector debt and a large overhang of non-performing loans (NPLs), remain important downside risks,” said the lender which has a 5 per cent stake in Bank of Cyprus and 5.4 per cent in Hellenic Bank.
The Cypriot economy which emerged in 2015 from a prolonged recession, expanded 3.9 per cent last year, the highest rate since 2008, and 3.4 per cent in 2016, allowing the unemployment rate to drop this year to a single digit for the first time in years.
The London-based bank said that last year’s growth was driven by both investment and private consumption adding that fixed capital formation exceeded one fifth of economic output last year for the first time since 2010.
“After many years of negative contribution to growth, government spending also provided a small growth boost,” it said, adding that fiscal performance remained strong last year when the government generated a budget surplus of 1 per cent of the economy.
Still, “net exports were the only drag on growth as imports, supported by rising private consumption and investments, grew by a higher rate than exports,” it said.