Cyprus: GDP records slowest increase since Q4 2023 in Q4
Cypriot economy ends 2024 on a lower note: A second release confirmed that GDP growth slowed to 2.6% year on year in Q4 (Q3: +3.9 yoy), marking the slowest growth since Q4 2023. On a working-day and seasonally adjusted quarter-on-quarter basis, economic growth slowed markedly to 0.3% in Q4, compared to the previous period’s 0.9% expansion. Looking at 2024 as a whole, economic growth rose to 3.4% from 2023’s 2.6% but came in below the prior 10-year average of 4.4%.
Consumption and exports drive the slowdown: Year on year household spending growth fell to 2.5% in Q4, marking the weakest expansion since Q1 2021 (Q3: +3.9% yoy), and public spending growth moderated to 2.5% in Q4 (Q3: +5.2% yoy). On the flip side, fixed investment bounced back, growing 62.0% in Q4 and contrasting the 6.4% decrease logged in the previous quarter, due to a sharp rebound in machinery, equipment and weapon systems investment.
On the external front, exports of goods and services flatlined in Q4, after growing 4.3% in Q3. Meanwhile, imports of goods and services growth sped up to 11.9% in Q4 (Q3: +0.9% yoy).
Momentum to soften ahead: Our Consensus is for GDP growth to slow in 2025 from 2024 mainly due to a weaker expansion in exports amid heightened global trade frictions. That said, fixed investment should strengthen on the heels of ECB rate cuts, helping Cyprus to remain among the fastest-growing economies in the Euro Area.