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Roundup: Research center expects Cypriot economy to grow by 2.4 pct in 2016

Xinhua, April 21, 2016 Adjust font size:

The bailed-out Cypriot economy is expected to grow by 2.4 percent in 2016, a revise downwards from an original projection of 2.7 percent, relative to a growth of 1.6 percent the previous year, according to the Economic Research Center (ERC) of the University of Cyprus.

The official projection of growth by the Finance Ministry of this year is 2.5 percent while the projection of the International Monetary Fund stands at 1.6 percent.

ERC said in its April economic bulletin that the main reasons which led it to revise downwards its projection at the start of this year are foreign-related and include a prolonged recession in Russia because of low oil prices and a lower growth in the eurozone.

It also cited a slower growth in Britain and a weaker sterling pound and uncertainty over the outcome of the Brexit plebiscite in June.

However, actual economic results during the first three months may offset these foreign-related pressures on the Cypriot economy.

Tourism in March from both Russia and Britain has marked an increase of about 35 percent with the total number of tourists arrivals of the month increasing by almost 50 percent.

Tourism was the main factor which helped Cyprus to beat the pressures of a three-year austerity program under a 10-billion-euro (about 11.4 billion U.S. dollars) bailout assistance program by the Eurogroup and the International Monetary Fund three years ago.

Projections by international lenders for the duration of the 3-year adjustment program were soundly beaten by actual results of the Cypriot economy.

ERC said it expects the Cypriot economy to grow by 2.2 percent in the first quarter and by 2.1 percent in the second quarter of this year relative to quarters 1 and 2 last year.

It said that the projected growth during the second half of 2016 will reach 2.7 percent.

Main reason cited by ERC are an increase in economic activity, a considerable drop in unemployment in the last six months of 2015, low oil prices and dropping lending rates.

The Cypriot economy beat all projections by the international lenders, who predicted a deep recession and a runaway unemployment.

By the end of the three-year adjustment program Cyprus reversed a 13 percent cumulative decrease of its GDP, notching a 1.6 percent increase of its annual economy of about 18 billion euros.

Analysts attribute these achievements to the resiliency of the Cypriot people and the island's economy, to better than expected performance of the tourism sector and to the diligent application of requirements set down by its lenders. (1 euro = 1.14 U.S. dollars) Endit