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Cyprus Finance Ministry Cuts its Economic Forecasts
2009-01-12 14:40:33

Nicosia, Jan 9 - Cyprus Finance Ministry cut on Friday its economic forecasts in the wake of the global financial crisis.

Charilaos Stavrakis said that the Ministry projects economic growth of 2.1% as its central scenario, and 2.6% as an optimistic scenario instead of 3.0% provided for in the 2009 budget.

Despite the downward revision, Mr. Stavrakis said that both the Finance Ministry and the Government have set a target that Cyprus will present in 2009, the highest growth rate in the Euroarea which is expected, according to EU Commission figures, to present negative growth of 0.9%.

“The international financial crisis indeed is getting worse and this inevitably affects an open economy as that of Cyprus. However, we continue to believe that we will have very satisfactory growth rates,” Mr. Stavrakis told a press conference.

According to the Finance Ministry figures, Cyprus in 2009 will present inflation of 2% (down 0.5% compared to the initial forecast), 4.5% instead of 4.2% unemployment and fiscal deficit between 0.6% and 0.8%

In revising its forecast, the Finance Ministry took into account the slowdown in the Euro area in general as well as the slowdown in Cyprus main economic partners, namely the United Kingdom, Cyprus main tourist partner, Russia that is equally important to Cyprus regarding tourism, real estate and investments, as well as the “dramatic deterioration” of the UK sterling - euro rate, which affects the competitiveness of the Cypriot tourist product.

The Finance Minister also referred to the decline of consumer's confidence noting that this took place due to “the literature and scaremongering developed around the problems of the economy.”

As regards the measures to combat slowdown, Mr. Stavrakis recalled that the government approved a 52 million extraordinary plan, the increased spending provided for in the 2009 budget as well as the government’s bid to increase the implementation rate for the development projects.

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