Growth moderated in 2023 with slowing consumption growth, lower services exports to Russia, and fading post-pandemic base effects. But growth has remained above the euro area (EA) average, supported by a continued recovery in tourism, expanding financial services and ICT activity, and strong...

This Selected Issues paper discusses the causes and implications of elevated inflation in Cyprus and describes recent inflation trends. The paper also analyses drivers of inflation in with an augmented Phillips Curve and investigates how wages adjust to inflation. Estimating a pass-through from...

This 2023 Article IV Consultation discusses that Cyprus's economy has been resilient to the fallout from Russia's invasion of Ukraine. The outlook is uncertain with risks from an escalation of the war and a possible recession in Europe. Should inflation expectations rise further and the...

This paper focuses on Cyprus' Fourth Review Under the Extended Arrangement Under the Extended Fund Facility (EFF) and Request for Modification of Performance Criteria. The program remains on track. Fiscal targets for the first quarter were met with considerable margins, domestic payment...

KEY ISSUES Background: The large imbalances that accumulated prior to the global financial crisis culminated in a collapse of the banking sector in early 2013. In response, the authorities took unprecedented measures and adopted an economic adjustment program, supported by official financing,...

This Selected Issues paper on Cyprus models the evolution of the saving rate to help shed some light on its determinants, which could help inform medium-term projections. This paper suggests that household net wealth and unemployment are key determinants of the saving rate in Cyprus. Cypriot...

Cyprus is highly exposed to the fallout from the war in Ukraine through trade with Russia. This new challenge comes against the background of the lingering effects of the pandemic and financial vulnerabilities dating from the 2012-13 crisis. Growth is projected to slow from 5½ percent in 2021...

Cyprus experienced significant internal and external imbalances owing to the European financial crisis. The oversized and weak banking sector continued to be a threat to the sovereign. Greek debt restructuring, together with loan losses of both Cyprus and Greece, resulted in the two largest...