According to the World Economic Outlook (WEO) published on Tuesday, the growth rate of the Cypriot economy for 2021 will be 4.8% compared to a recession of 5.1% recorded in 2020. The growth rate was projected at 3% in last April`s WEO. Growth for 2022 is projected at 3.6%, compared to 3.9% projected in April.

According to the IMF, unemployment is projected to fall from 7.6% in 2020 to 7.5% in 2021, to be further reduced to 6.9% in 2022, a forecast that remains unchanged since April.

The inflation forecast is also revised upwards, as the IMF estimates that in 2021 it will rise to 1.7% from -1.1% in the previous year and will be 1% in 2022. In its spring forecast, the IMF predicted that inflation would reach 0.5% in 2021 and 0.8% in 2022.

The current account deficit is also projected to increase and according to the IMF will reach 9.3% from 11.9% of GDP in 2020 and will fall to 7.4 in 2022. According to the projections of last April, the current account deficit was estimated at 8.5% of GDP in 2021 to decline to 6.1% in 2022.

Based on the forecasts of Cyprus’ Ministry of Finance included in 2022 budget, the growth rate is expected to reach 4% in 2022 compared to an estimated growth of 5.5% in 2021.

World economy

Concerning the global growth, IMF projection for 2021 has been revised down marginally to 5.9% from 6% and is unchanged for 2022 at 4.9%.

As mentioned, the global recovery continues but the momentum has weakened, hobbled by the pandemic. Fuelled by the highly transmissible Delta variant, health risks abound, holding back a full return to normalcy.

IMF also notes that pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries. Overall, risks to economic prospects have increased, and policy trade-offs have become more complex.

It also highlights as the foremost policy priority to vaccinate adequate numbers in every country and prevent more virulent virus mutations.

Source: Cyprus Mail