Filenews 7 June 2025 - by Theano Thiopoulou
The economy of Cyprus was in the top three of the best performers at the European level in the first quarter of 2025 and the most important thing is that the country's GDP has not yet incorporated the positive effects that the tourism sector usually creates on economic activity.
At the same time, however, European governments and EU authorities continue to be concerned about the fact that several countries, even the strong economies of the Union, remain at growth levels close to zero or slightly above, while some are already in recession.
Data released yesterday by Eurostat show that in the first quarter of 2025 the annual change reached 3% of GDP.
In the first quarter of 2025, compared to the fourth quarter of 2024, Cyprus recorded a positive change of 1.3%. Eurozone GDP grew at a rate of 0.6% in the first quarter, compared to the previous quarter, while on an annual basis in the first quarter of 2025 growth was 1.5%.
Ireland's economy broke the clock, growing 9.7% quarter-on-quarter, followed by Malta at 2.1% and Cyprus at 1.3%.
In contrast, Luxembourg's economy contracted by 1%, Slovenia's by 0.8%, Denmark and Portugal by 0.5%.
Greece, Latvia and Finland had zero growth in their economies in the first quarter of 2025 compared to the last quarter of 2024.
The economies of France, the Netherlands and Austria moved marginally above zero growth (0.1%).
Despite the fact that, initially, with the imposition of tariffs on Europe by the American President, concerns were expressed about the course of the Cypriot economy, the positive outlook remains dynamic.
The Central Bank had said that in the macroeconomic forecast bulletin to be published later this month, there would be a downward revision of the forecasts for the growth of the economy. Based on the March 2025 forecast for 2025-27, the Central Bank expected GDP to grow by around 3% per year and economic activity would come from domestic demand and, to a lesser extent, from net exports, in line with the expected recovery in external demand. He clarified, however, worse-than-expected geopolitical developments may slow the pace of recovery.
Forecast from Frankfurt close to 1%
The ECB also appeared cautiously optimistic about the course of the Eurozone economy on Thursday, when the governing council took the decision to cut interest rates by 0.25%.
Technocrats expect real GDP growth to average 0.9% in 2025, 1.1% in 2026 and 1.3% in 2027. The non-revision of the growth rate in 2025 reflects a stronger-than-expected first quarter, combined with a weaker outlook for the rest of the year, the ECB said in its bulletin.
As they explain, the uncertainty surrounding trade policies is expected to weigh on business investment and exports, especially in the short term, but the rise in public investment in defence will increasingly support growth in the medium term.
Also, rising real incomes and a strong labour market will allow households to spend more, and together with more favourable financing conditions, this should strengthen the economy's resilience to global shocks.
