Cyprus GDP growth seen at 3.7%

According to the Ministry of Finance, the GDP growth rate for 2006 is expected to reach 3.7% attributed to private consumption and export of services. For 2007 the growth rate is expected to increase to 3.8% due to the additional demand for tourism and services.

Unemployment is expected to increase to 5.5% in 2006 compared to 5.3% in 2005, while in 2007 the unemployment rate is expected to ease to 3.6%.

Inflation (HICP) is expected to reach 2.5% in 2006 compared to 2.0% in 2005. For 2007 HICP is expected at 2.3% as a result of restricting “imported” inflation, the fixing of the CYP to the EUR, the expected containment in salary increases supported by the improvement in productivity as well as the measures taken to tighten fiscal policy.

Fiscal deficit is expected to reach 2.0% of GDP in 2006 and to be further reduced to 1.6% of GDP in 2007.