Real GDP growth in Cyprus expanded by about 6 percent over 2022H1, mainly driven by a faster than expected recovery in tourismrelated activities and, to a lesser extent, by growth in information and communication activities and in professional services. At the same time, weakness in the Cyprus GDP performance could be expected to become visible over 2022H2 and 2023, primarily owing to the anticipated worsening in the international environment outlook. More specifically, the impact of the war is expected to be channelled directly, via the disruption in trade of services and the rise in commodity prices, in particular oil and wheat, as well as indirectly, via the impact on business and consumer confidence. Our exposure to Russia via the export of services side is the most significant vulnerability, with the most important exposure relating to financial and other business services and, to a lesser extent, tourism, transport as well as telecommunications, computer and information services. At the same time, it is important to mention significant adaptation effects for example in the area of tourism, losses from the Russian market have been covered to a large extent by other markets such as the UK, Poland, Germany, Israel and Scandinavian countries. The labour market has also been exhibiting continued resilience. Over 2022H1, the unemployment rate reached 6,7 percent, well below the 7,5 percent rate recorded in 2021. The resilience of the Cyprus labour market is in line with business views about expecting a relatively small impact from the war.
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