articles | 09 May 2018

EBRD revises Cyprus’ growth forecast to 3.2%

The European Bank of Reconstruction and Development (EBRD) said that it had revised its forecast for the Cypriot economy to 3.2% for 2018 from a previous 2.5%.

In 2019, economic growth is expected to slow down to 3%, the EBRD said in a statement on its website recently.

“However, the legacies of the crisis, such as high public and private sector debt and a large overhang of non-performing loans (NPLs), remain important downside risks,” said the lender which has a 5% stake in Bank of Cyprus and 5.4% in Hellenic Bank.

The Cypriot economy which emerged in 2015 from a prolonged recession, expanded 3.9% last year, the highest rate since 2008, and 3.4% in 2016, allowing the unemployment rate to drop this year to a single digit for the first time in years.

The London-based bank said that last year’s growth was driven by both investment and private consumption adding that fixed capital formation exceeded one fifth of economic output last year for the first time since 2010.

“After many years of negative contribution to growth, government spending also provided a small growth boost,” it said, adding that fiscal performance remained strong last year when the government generated a budget surplus of 1% of the economy.

Still, “net exports were the only drag on growth as imports, supported by rising private consumption and investments, grew by a higher rate than exports,” it said.

Source: Cyprus Mail

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