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Cyprus expected to double economic expansion in 2015: research

Xinhua, August 4, 2015 Adjust font size:

Cyprus is expected to more than double its projected economic expansion this year due to a number of favorable factors, the Economic Research Center (ERC) of the University of Cyprus said in its August economic outlook review published Tuesday.

ERC said it expects the economy to grow by 1.1 percent at the end of 2015 after shooting up by 1.8 percent in the second half of the year.

The projected growth is more than double the 0.5 percent expansion forecast of the troika technocrats who concluded their seventh review of the Cypriot economy in mid-July.

Cyprus was bailed out in March 2013 in a 10 billion euros (about 11 billion U.S. dollars) financial assistance deal with the Eurogroup and the International Monetary Fund (IMF).

But the troika experts representing the European Commission, the European Central Bank and the IMF said in their report that Cyprus may not need to draw the entire loan amount.

The eastern Mediterranean island is expected to conclude its economic adjustment program next March, having secured financing of its economy from international markets by that time.

ERC cited as factors which favored Cyprus's economy was an expansion of output in the European Union and the euro area in the first quarter of 2015, lower international oil prices and stronger external demand due to higher real incomes.

It also said that the weakening of the euro against the British pound and the slowdown of the Russian ruble depreciation helped Cyprus tourism to expand more than originally estimated.

But ERC warned that there are downside risks which may keep economic growth to a low level in 2016, when economic expansion is expected to also be 1.1 percent.

These risks are associated with the uncertainty over the Greek crisis, the high level of domestic non-performing loans, possible ineffective implementation of new insolvency and foreclosure legislation and bottlenecks in the introduction of legislation for the sale of loans by banks. (1 euro = 1.10 U.S. dollars) Endit