Insider Economy UCy: Cyprus GDP to suffer “severe contraction” in 2020

UCy: Cyprus GDP to suffer “severe contraction” in 2020

The University of Cyprus’ Economics Research Centre has projected that the country’s GDP is set to drop by 6.9% in 2020 under a baseline scenario and by 13.1% under an adverse scenario.

In its economic outlook of May 2020 the University of Cyprus’ Economics Research Centre notes that the Cypriot economy “is projected to suffer a severe contraction in 2020 as a result of the COVID-19 pandemic.”

Real GDP is projected to drop by 6.9% in 2020, under the baseline scenario, it adds.

The projection incorporates the direct impact of containment measures enforced in Cyprus, thereby reducing the production capacity in sectors of economic activity; the impact of the COVID-19 pandemic relating to reduced capacity utilization due to measures/restrictions, which will remain in place after the relaxation of the initial containment measures and the impact of reduced external demand, particularly demand for tourist services.

“Due to the high uncertainty surrounding the outlook, two alternative scenarios are considered, a baseline and an adverse one,” the ERC says.

The scenarios, it explains, differ with respect the adjustment period experienced in each sector, following the complete lifting of containment measures in the particular sector and the evolution of external demand.

During the adjustment period, “sectors are assumed to operate below their normal capacity utilisation levels due to supply and demand constraints.”

The baseline scenario assumes an adjustment period of two months and a reduction in external demand for tourist services in Cyprus from April to August, translating into a decrease of 40% in annual tourist arrivals.

At the same time, the sector of retail trade, transportation, accommodation and food service activities and the sector of arts, entertainment, recreation and other service activities are associated with the largest output losses, amounting to around 20% of their gross value added.

Significant output losses are also estimated for construction, manufacturing, as well as administrative and support service activities, the ECR adds.

“In the adverse scenario, which assumes a longer adjustment period and a sharp reduction in external demand, the contraction in real GDP could be as severe as 13.1%,” it says.

(CNA)

Top Stories

New record number of new cases of COVID-19 on Tuesday: 152

The Health Ministry announced 153 new COVID-19 cases on 20 October, out of 4,410 laboratory tests, taking confirmed infections to 2, 839. The break-down of...

Stench in Kokkinotrimithia and Mammari due to farms and burned garbage

Citizens of Kokkinotrimithia and Mammari contacted philenews and complained that at the Kafkalla location some people threw a huge quantity of garbage and set...

Police chasing suspects in Paphos

Members of the Anti-Narcotics Unit who were watching some suspects for drug trafficking, according to first information, chased a suspicious vehicle which tried to...

71-year-old dead in accident

During an accident that took place this morning in the district of Nicosia, 71-year-old Andreas Alexandrou from Kato Moni of Nicosia District lost his...

Rain and hail in Lympia and Xylotympou (PHOTOS)

Rain and hail were seen in various areas of Cyprus. Social media users published photos from Lympia and Xylotympou. (philenews)

Taste

Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...

Mezedes

No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...