Cyprus only country in euro area with positive growth in 2009 first quarter
Brussels, July 10 (CNA) – Cyprus is the only country in the euro area to have seen positive growth continue in the first quarter of 2009, the European Commission's DG for Employment, Social Affairs and Equal Opportunities July 2009 monthly monitor on the EU employment situation and social outlook has said.
The commission stated that “even though Cyprus has so far been the only country in the euro area to escape recession according to the IMF the unemployment rate has increased since September 2008 to reach 5.3 % in May 2009, up 1.8 % year-on-year.”
“However, this rate remains one of the lowest recorded in the EU, while the employment rate, at 69.5 %, remains relatively high,” the July 2009 monthly monitor said, adding that according to the District Labour Offices in June 2009, registered unemployment increased by 1.4 % on the previous month and amounted to 17,900. “This mainly reflects employment adjustments in the construction, trade, real estate and business activities sectors. However, the rise in unemployment seems to have subsided recently compared to the sharp increases noted in the preceding months.”
According to the report, Cyprus's GDP has remained relatively stable over the last few months. After posting growth of 3.7 % in 2008, Cyprus is the only country in the euro area to have seen positive growth continue in the first quarter of 2009.
According to the latest Commission forecast, it is even expected to remain on a growth trajectory in 2009 and 2010, but at a more moderate pace than in the previous years: +0.3 % and +0.7 % respectively. The IMF predicts it might even grow by 2.1 % in 2010, while the Finance Ministry already sees 1 % growth for 2009.
“This relatively positive economic outlook is tempered by the substantial decline in tourist activities on the island. Over the five first months of 2009, the tourism sector's income, which accounts for 15 % of Cyprus's GDP, dropped by 11.7 % in comparison to the same period a year earlier, and by 17.6 % in May alone. The authorities fear a massive 20 % drop in arrivals during the holiday high season, which would have dramatic consequences on the island's seasonal employment,” the report said.
Recent data covering the period up to May/June 2009 show that EU labour markets are continuing to deteriorate. Unemployment continued to rise in May, though more moderately than in the first four months of the year, with men and young people continuing to be hit particularly hard. Overall unemployment rose by 385,000 to reach 21.5 million, an increase of 5.1 million (or almost a third) compared to May 2008.
However, while hard data have so far remained depressed and the outlook for the labour market in coming months remains bleak, there are increasing signs that the pace of economic deterioration is moderating and that confidence among businesses and consumers, although remaining pessimistic, is improving.