At the same time, inflation is expected to be 0.8% for 2018, 0.7% for 2019 and 1.2% for 2020.
The Cypriot economy developed strongly in the first three quarters of 2018, although real GDP growth in the third quarter (3.7% on an annual basis) was the lowest in the year and the economic climate rebounded the fourth quarter soft patch in the second and third.
The labor market continues to be strong, as employment increased by 3.7% annually in 2018-Q3 and compensation per employee by 1.9% in contrast with 2017 which was 0.7%. As a survey shows that the Construction Industry continued recruiting in the first fourth quarter.
Disposable personal income and support private consumption are expected to be boosted from Earnings from employment and higher wages.
Public consumption is also expected to grow between wage growth and employment in the public sector. In addition to that, due to strong Construction Activity, investments will contribute positively in 2019.
Finally, in the upcoming quarters, there will be two opposing forces, the increase of disposable personal income which will enhance the price pressures and the reduction of oil prices which will yield them.
Generally, the inflation is expected to fall to 0,7% in 2019, however as the oil prices are reducing, the inflation is expecting to rise by 1,2% in 2020.