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Cyprus Economy to Slow Down, say Finance Minister and Central Bank Governor
2009-06-17 09:19:42

Nicosia, Jun 16, - Cyprus Finance Minister Charilaos Stavrakis has said that there are indications that the growth of the Cyprus economy will slow down.

Speaking after a meeting of the Cyprus Finance Advisory Committee, Mr. Stavrakis said that during the meeting, the current situation and the prospects of the Cyprus economy have been discussed.

“Special emphasis was given to the briefing by Minister of Communications and Works on the progress of the infrastructure projects,” he said, adding that they also focused on the issue of investments and the initiatives of the government aiming to attract increased foreign investments by the signing of agreements for avoiding double taxation with countries like Russia and Italy.

Replying to a question, Mr. Stavrakis said that according to Eurostat, Cyprus growth rate in the first three months of 2009 was 1.5%. “There are clear indications that show a slow down to the economic growth for the coming months. However, we are convinced that Cyprus will not only be the only country in the EU with a positive growth, but also the final growth rate that we will achieve in 2009 will be considerably higher than the forecasts of the International Monetary Fund and the European Commission,” he added.

Speaking in the framework of the meeting, Central Bank of Cyprus (CB) Governor Athanasios Orphanides has said that the negative impact of the international economic crisis on Cyprus’ real economy is relatively constrained at present. However, Mr. Orphanides revised downwards the projection for the growth of the Cyprus economy, compared to the Central Bank’s forecast in December 2008.

“According to the forecasts the real GDP growth rate in Cyprus is expected to reach 0.4% in 2009 and 0.7% during 2010”, compared to a growth rate of 2% in 2009 and 2,5% for 2010 that the Central Bank projected last December.

Mr. Orphanides noted however, that Cyprus was less exposed because the crisis had in general affected heavy industry and manufacturing in the EU countries. In addition, he said that Cyprus’ economy growth was still 1.0-2.5 percentage points higher than that of the euro zone countries.

“Taking that into account, a forecast for a growth rate of 0.4% in 2009 must be considered very positive,” he added.

Referring to the banking sector in Cyprus, CB Governor noted it remains healthy and remarked that it was not directly affected by the international crisis attributing this partly to the strict regulatory framework for banking supervision applied in Cyprus.

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