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Commission predicts Cyprus economy will improve from 2003
2002-04-24 11:05:31

By Nicos Bellos - Brussels, Apr 24 (CNA) -- The decline of tourism in combination with the decrease of internal demand (consumption) will result in a temporary slowing down of Cyprus' economy growth for 2002, while the whole situation will improve as of 2003.

In a report with its predictions for the economies of the candidates for accession to the European Union, which was today made public, the European Commission says that despite the slow rate of growth, Cyprus will not deviate from the Maastricht criteria for participation in the Economic and Monetary Union, which concern deficit, monetary stability, debt and inflation.|

According to the Commission's predictions, Cyprus' Gross Domestic Product will rise by 4,0% in 2002, while last year the GDP recorded an increase of 3,7%.

The report says that the decline of tourism resulted partly in the serious decrease of import rates, which in turn resulted in the decrease of the deficit.

It adds that despite the lower rate of growth, Cypriot authorities are making all necessary efforts to achieve the midterm goal, which is a balanced budget.

The Commission says that the sectors of construction and agriculture are in a better position, while prospects for tourism are highly insecure.

The deficit will continue to decrease for the next two years while at the end of 2003 it is estimated that it will be around 1,8% of the GDP.

Regarding the monetary policy, the Commission underlines that the Cyprus pound has not been negatively influenced by the liberalisation of capital movement or by the decision for the Central Bank's independence.

Inflation is expected to rise this year as well in 2003, while unemployment will record a small increase in 2002 and in 2003 will drop to 4%.

CNA/NB/RM/RG/2002

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