It is expected that the Cyprus economy will show rapid growth in 2018 and 2019, and real GDP in this period will grow by 3.9% and 3.5%, respectively, said on Wednesday the University of Cyprus (UCy).
According to the Research Center UCy, the main drivers of economic development in 2018 and 2019 will be performing vigorous growth of intrinsic activity, ongoing improvement of the domestic labor market, strong financial performance, such as low interest rates, deleveraging, growth of domestic deposits and loans.
The projected change in GDP to 3.5% next year due to the recent drop in economic sentiment in Cyprus, inflation in energy resources, the economic slowdown in the euro area, as well as the interest rates in Europe, according to the report, reflecting the economic outlook.
However, according to UCy Center, there are still risks for the economy of the island, in spite of recent progress - high debt and overdue loans pose a risk to the stability of the banking system, economic confidence and growth prospects.
Other risks include: increased uncertainty in the euro zone due to the strategic direction of Italy, which may adversely affect the cost of borrowing for other vulnerable countries; slower than expected growth of the euro; high uncertainty in the UK, caused by the negotiations on Brexit, and the pressure on the competitiveness of the Cyprus tourist product.