Cypriot economy set for a 7.75% contraction

Cyprus’ economy faces significant downside risks due to the coronavirus crisis, with tourism being impacted the most, according to a European Commission report released on Tuesday.

In its Summer 2020 Economic Forecast, the European Commission said that Cyprus’ tourism revenues are expected to be only 25 percent of last year’s level, which stood at 2.683 billion euros, according to the Statistical Service of Cyprus.

Tourists have started to trickle in since flights resumed in early June, but the real test for the recovery of the country’s tourism sector is expected after August 1, when the British market – the largest source of tourists to Cyprus – will open.

The European Commission forecast said that as a further consequence of the drop in tourism, unemployment in the services sector is expected to significantly increase.

The European Commission projected Cyprus’ gross domestic product to contract by 7.75 percent in 2020 and to expand by 5.25 percent in 2021.

[Xinhua]