Filenews 9 December 2024
The Cypriot economy maintains high growth rates at a time when strong European economies are "flirting" with recession and continues to record a growth rate multiple times higher than the European average. Specifically, in Cyprus, GDP grew by 3.8% in the third quarter of 2024 on an annual basis compared to 0.9% in the Eurozone, while compared to the second quarter it increased by 1% against an increase of 0.4% in the Eurozone. The data released by Eurostat show that the performance of the Cypriot economy comes at a time when strong European economies such as Germany and France are facing stagnation or even negative growth rates. It is characteristic that according to Eurostat data, in the third quarter of the year German GDP stagnated (0.1%) and in France the growth rate reached 0.4%. In the third quarter compared to the same period last year, German GDP had a negative sign of -0.3%, as of Latvia -1%, Estonia -0.6%, Austria -0.8%.
On an annual basis in the third quarter of 2024 compared to last year, the largest increase of 5.% was recorded by Malta, 4.1% recorded by Croatia, 3.9% by Denmark, followed by Cyprus with 3.8% and 3.4% by Spain. In Greece, GDP grew by 2.4% year-on-year, compared to the second quarter, compared to 0.3%. Cyprus is reminded that based on the 2025 budget and the estimates included in the Stability Programme, real GDP growth is projected at 2.9% in 2024, 3.1% in 2025, 3.2% in 2026 and 3.3% in 2027. According to the Central Bank's estimates, GDP growth for 2024 is expected to reach 3.5%, compared with 2.5% in 2023. In 2025 and 2026, GDP growth of 3.1% and 3.2%, respectively, is expected. The projected path of GDP is mainly due to expected further growth in domestic demand and, to a lesser extent, foreign demand.
Economies signal to the ECB
Clouds over the eurozone economy sparked speculation about whether the ECB could opt for a 0.5% cut instead of 0.25% on December 12. While French central banker François Villeroy de Galhau and Portugal's Mario Centeno have already appeared open to such a move, most officials — including some of the leading moderate voices at the ECB — support a phased approach interpreted as reductions of 0.25 percent. In a Bloomberg survey of analysts, they predict that at next week's meeting bank officials will decide to cut the key interest rate by 25 basis points, and will continue to do so at every meeting until June. And risks are rising, Bloomberg said, citing political turmoil in Germany and France that is causing some concern for investors. At the same time, wars are raging in Ukraine and the Middle East and Donald Trump is threatening trade tariffs. Even ECB hawk Robert Holtzman called a 25 basis point rate cut at its next meeting "understandable," but no more. Against this backdrop, traders estimate that another 25 basis point rate hike – the fourth in a row – is the most likely scenario.
