Warning NPLs could surge in Cyprus

The Central Bank of Cyprus (CBC) issued a warning on Monday, cautioning about the potential growth of nonperforming loans (NPLs) driven by high-interest rates and inflation, which are impacting households' disposable income and businesses' profitability.

In its 2022 Financial Stability Report, the CBC projects GDP growth of 2.4%, with inflation expected to ease to 3.9% in 2023. Despite ongoing global challenges, including the prolonged war in Ukraine, the CBC expects the Cypriot economy to maintain a positive trajectory in 2023, with growth projected to accelerate to 2.7% in 2024 and 3.1% in 2025.

However, the CBC acknowledged that these projections were made before the outbreak of the war in the Middle East, introducing uncertainty about its potential impact on the Cypriot economy. The duration, intensity, and scope of the war will influence the economic consequences...