Local
articles | 09 February 2015

0.4% economic growth forecast for 2015

The Finance Ministry maintains its 0.4% economic growth forecast for 2015, following three years of economic contraction in a challenging environment both at home and abroad.

“Economic growth rate in 2015 is expected to range around 0.4% in real terms while it is expected to accelerate to 1.6% in 2016 on increased disposable income and, as a result, of consumption,” the finance ministry said in a circular, dated January 30 and published on its website today.

The recipient list of the circular informing recipients about the 2015 budgetary framework is addressed to state institutions, including the presidency, ministries, the attorney general’s office and others.

Inflation this year is expected to range around 0.4% and accelerate to 1.2% and 1.6% in 2016 and 2017 respectively, the circular signed by undersecretary Christos Patsalides said.

In addition, the government is projected to have generated a marginal fiscal surplus in 2014 of 0.1% of gross domestic product as well as a primary surplus of €451 million or 2.6% of GDP, according to the circular. The 2014 primary surplus, which includes total government revenue and expenditure excluding interest payments on debt, exceeds by more than €1.1 billion forecasts included in the first evaluation of Cyprus’s programme by international creditors.

The budget is forecast to generate a fiscal gap of 1.2% of the economy in 2015 before narrowing to 1% and 0.1% in 2016 and 2017 respectively, the circular said.

“The 2015 budget as well as the medium-term budgetary framework 2015-2017 were prepared in a critical period for the Cypriot economy which continues to face many challenges and risks arising both from domestic factors (programme implementation, regaining confidence in the Cypriot economy) as well as exogenous factors (crisis in Russia, uncertainty in the euro area and the political situation in Greece),” the circular said.

The major strategic goal of the government is to kick-start the real economy, increase productivity, reduce unemployment and create the conditions for sustainable growth.

The current account in 2015 is forecast to generate a deficit a 0.9% this year and 0.6% and 0.5% in 2016 and 2017 respectively, according to the circular.

Source: Cyprus Mail

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