The European Commission, according to its spring economic forecast, expects growth in Cyprus to keep progressing through the years 2016 (1.6%) and 2017 (2%). Moreover, the debt to gross domestic product (GDP) ratio is expected to drop to 105.4% in 2017 with the budget retaining a positive balance of 2.2% in 2016 and 2.4% in 2017.
According to the Commission export growth is expected to increase even further in 2016 and 2017. Tourism grew during 2015 and continued to grow during the first quarter of 2016. In regards to non-performing loans the EU Commission forecast states that debt servicing is expected to increase due to a higher pace of restructuring of bad loans and that this should help reduce non-performing loans. The forecast also predicts that investment should benefit from the stabilization of the housing market.
The EU Commission’s spring forecast expects real GDP growth to remain mostly unchanged in 2016 before picking up to 2% in 2017 due to declining consumer prices and the weaker Euro is expected to fade away.