In a recent online panel discussion hosted by the Cyprus Economic Society, Heiko Peters, Vice President and Senior Analyst at Moody's Risk Assessment Group, noted the continuous improvements in the Cypriot economy. He also highlighted its better performance compared to countries with similar ratings. Furthermore, Peters projected further growth of the Cypriot economy for 2024-25.

During his presentation, Mr. Peters mentioned that the Cypriot economy was upgraded by two notches last September by Moody's to a Baa2 rating. He referred to ongoing improvements in Cyprus's profile, such as robust GDP growth, resilience to recent economic shocks, steady debt reduction, and continual strengthening of the banking sector.

Peters noted that Cyprus has recovered faster from the pandemic's impacts than other Southern European states like Greece, Portugal, Spain, and Italy. Additionally, tourism revenues in 2023 surpassed pre-pandemic levels.

He also stated that the growth prospects have been significantly strengthened since the economic downturn, driven by increases in working hours, productivity, and capital accumulation.

Moreover, Peters mentioned that EU funding through the Recovery and Resilience Facility, amounting to 4% of Cyprus's GDP, will support growth prospects and encourage structural changes.

He also pointed out that Cyprus's demographic trends and labor supply are more favorable compared to the rest of the Eurozone and Southern European countries. The current increase in the employment rate positively impacts labor supply.

Simultaneously, Heiko Peters mentioned that Cyprus has one of the largest public debt reductions among developed economies and that its public debt is sustainable.

Cyprus is among the few countries rated Baa2 by Moody's, which are predicted to have a fiscal surplus in 2024-25. Moreover, its debt burden has been reduced quickly compared to the aforementioned countries, despite starting from a higher point.

Answering questions about sectors expected to grow, he referred to financial services, information and communication technologies (ICT), transportation, and tourism, which he expects to see more moderate growth.

Although he did not mention any immediate risk to the economy, Peters said that Cyprus would be affected by a generalization of conflict in the Middle East and possibly changes in migration and interest rates.