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Cyprus raises economic growth forecast for 2016 to 2.2 pct

Xinhua, May 14, 2016 Adjust font size:

Cyprus upgraded its economic growth for 2016 to 2.2 per cent from an original 1.5 per cent projection, under a budgetary policy approved by the government on Friday.

"A growth rate of 2.2 per cent is forecast for this year by the fiscal policy framework approved by the cabinet today, a significant acceleration of growth which seems that it is a fully attainable objective," said Finance Minister Harris Georgiades after a session of the Council of Ministers.

Rating Agencies and international lenders who helped Cyprus avoid an economic meltdown three years ago under a 10-billion-euro bailout had projected this year's growth at 1.7 per cent of the eastern Mediterranean island's 18-billion-euro annual economy.

Georgiades said that the targeted yearly acceleration is supported by the estimated growth for the first quarter of this year.

He said he briefed the cabinet that the Eurostat had upgraded its estimate of the Cypriot economic growth for the first quarter of 2016 to 2.6 per cent based on flash estimates.

Eurostat said Cyprus' GDP rose by 0.9 per cent during the first quarter of 2016, compared with the previous quarter and 2.7 per cent compared with same quarter of the previous year.

Growth for both the euro area and the EU in the first quarter was estimated at 0.5 per cent.

Cyprus exited on March 31 a three-year economic adjustment program which involved harsh austerity, including salary and pension cuts up to 25 per cent and extra taxes.

Georgiades announced that as a result of better than expected economic results some of the burdens imposed on the population will be gradually lifted.

He said that a temporary contribution imposed even before the bailout will be scrapped by the end of the year.

The minister said that next year's budget will provide for an expenditure of 6.15 billion euros (6.95 billion U.S. dollars), an increase of 100 million euros, without any extra measures.

"We'll even gradually start reducing taxation," he said. Endit