Cyprus economy’s outlook extremely positive, forecast shows
Brussels, May 8 – Extremely positive is the outlook for Cyprus’ economy, according to the European Commission spring economic forecast which was released in Brussels this week.
Commission services project average stable growth and inflation contained. They also forecast public deficit, inflation and public debt to stay well below the Maastricht criteria in 2007, paving the way for Cyprus’ entry to Euro zone in January 2008.
The general Government deficit projected to inch down to slightly below 1.5% of GDP (1.4%). The debt-to-GDP ratio is projected to keep on a decreasing path, attaining about 55% by 2008. The deficit for 2006 is estimated at 1.5% of GDP, about 0.5% of GDP lower than the target in the Budget Law. The Maastricht convention defines that deficit should not surpass 3% of GDP.
The public debt for 2006 is estimated at 65.3% and is projected to fall to 61.5% in 2007. Commission forecast further decline of the public debt in 2008 (54.8%), which is within the Maastricht criteria.
Inflation is projected to further decrease to 1.3% in 2007, although Commission forecasts an upward movement to 2% in 2008.
GDP is projected to continue growing solidly at 3.8% in 2007 and 3.9% in 2008, still driven by domestic demand, which would contribute around 4 percentage points to GDP growth.
Labour market conditions in 2006 remained tight, at nearly full employment, with unemployment at around 4.75%. The unemployment rate will increase slightly to 4.8% in 2007 and will remain stable at 4.8% in 2008.