Cyprus growth satisfactory

The Cyprus economy recorded a satisfactory growth in 2006 despite the increase in oil prices, according to the Ministry of Finance (MoF). A Ministry report pointed out that

GDP growth rate in constant prices decreased marginally to 3.6% in 1H06 compared to 3.8% in the corresponding period of the previous year. Latest data confirm MoF’s expectation that economic growth will accelerate for the remaining of the year and will reach similar levels to the prior year.

Inflation increased gradually in the last 18 months attributed to large increases in oil prices, which however have recently eased. According to latest data and assuming that oil price will range between USD 65-70 per barrel, HICP inflation will range between 2.5%-2.6%, thus satisfying the Maastricht criterion.

Fiscal Deficit was forced down  to 2.4 % of GDP in 2005 and is expected to decline further to 2% of GDP in 2006 achieving the target set in the revised Convergence Programme.

Fiscal Economics, excluding non-recurring incomes, posted a significant improvement compared to the previous year, attributed to increased revenues (15.6% YoY) rather than containment of public expenditure.