Standard & Poor (one of the first credit rating agencies to downgrade Cyprus’ ratings to junk in 2012) has now upgraded Cyprus’ credit ratings to investment grade.
Standard & Poor anticipate that strong economic growth through 2021, prudent policymaking, and moderate state support to the banking system will allow the government to run budgetary surpluses and prompt a reduction in public debt. They consider raising the ratings on Cyprus over the next two years if the economy deleveraged significantly or if the banking sector reduced its non-performing exposures materially and its financial conditions improve.
The rating agency projects that the Cypriot economy will grow by 4% in 2018 and by 3% on average between 2019 and 2021. Real GDP growth by 4% in 2018 will allow a return to the economy’s 2011 pre-crisis size.
The unemployment rate has been on a declining trend falling from 16% in 2014 to 11% in 2017 and to 9,5% in the first five months of 2018.