Moody’s has affirmed Cyprus’ sovereign rating at B1, but changed the outlook to positive from stable. Key drivers for outlook’s change are: (i) improvements in economic resilience that have been observed over the past year; and (ii) Cyprus' consistent fiscal outperformance and favourable outlook which indicate a more rapid reversal in the public debt ratio than previously expected.
In particular, Moody’s noted that Cyprus’ strong and balanced economic recovery was supported by exports, domestic demand, and improving expectations of medium-term growth. Growth accelerated in 1H16, reaching 2.7% y-o-y, driven by an uptick in domestic demand and strong activity in the tourist and business service sectors.