Cyprus, which received €10 billion in aid from the European Commission and the IMF to avert a default, had previously estimated a 7.7% fall in gross domestic product for 2013. That had also been revised from earlier expectations of a 8.7% contraction, defined in its EU/IMF economic adjustment programme.

A recent Finance Ministry document did not offer specific forward guidance on recession projections for 2014, but said the economy still faced challenges amid a weak growth outlook. In December, the IMF trimmed its forecast for the island's economic contraction to 7.7% from 8.7%, but it stuck by its initial forecast for a cumulative economic downturn of 13% for the 2013-2014 period. The IMF also warned that Cyprus's efforts to extricate itself from debt would weigh on output for the next decade. Cyprus closed a major bank and confiscated deposits in a second bank to recapitalise it under terms of its international bailout. Controls to prevent a flight of capital are still in place - a first for a euro zone member nation.

Source: InCyprus