The bank published its forecasts for all countries in which it has operations on Monday.
The bank noted that the GDP declines in Cyprus were below 2% in both the second and third quarters of 2014 and the quarter-on-quarter changes had been consistently improving since mid-2013.
“Sectors such as trade, tourism (hotels and restaurants) and legal and accounting services have started to record positive growth rates again,” the bank said.
As a result, it revised its estimate for 2014 from -3.5% to -2.1%. “For 2015, we expect Cyprus to continue on the path to recovery, aided by lower oil prices as the country has a major trade deficit in oil products,” the bank said.
“While we had expected zero growth in 2015, we have now upgraded this to 0.7%.”
At the same time, the bank noted that the economy is still subject to major downside risks, and lending to the economy is still held back by the legacy of the crisis and the high level of non-performing loans (NPLs) of 50%.