EU forecasts lower deficit for Cyprus

The European Commission has forecast a stable growth environment for Cyprus in the next year and a further improvement in the economy including a decline in the fiscal deficit and steady inflation and unemployment.
Cyprus’ public deficit is expected to reach 1% of GDP by the end of 2007 and will follow a declining trend in 2008 and 2009, reaching 0,8% and 0,6% respectively, according to the autumn economic forecast for 2007 – 2009, released yesterday for all European Union member states. These figures come in contrast to the Commission’s May 2007 report, which projected a higher public deficit rate (1,4% in 2008 and 2009).
Based on the above data, Cyprus will be able to meet the EU obligation, undertaken by all Eurozone member states, to eliminate public deficit by the end of 2010.
The Commission said that Cyprus’ public debt will drop further, reaching this year 60,5% of GDP, 53,3% in 2008 and 49,6% in 2009, thus revising its forecast made in May 2007 that Cyprus’ public debt would reach 61,5% in 2008 and 54,8% in 2009.
Inflation in Cyprus is expected to reach 2,0% in 2007, 2,3% in 2008 and drop to 2,1% in 2009.
The Commission report says that Cyprus’ economic growth will reach 3,8% in 2007 and 3,9% in 2008 and 2009.
Regarding unemployment, the Commission projects that Cyprus will continue in the next years to have one of the best performances in the EU.
Unemployment in Cyprus is expected to reach 4,3% in 2007, 4,1% in 2008 and 3,9% in 2009.
Referring to the overall European economic prospects for 2007-2009 European Commissioner for Economic and Monetary Affairs Joaquin Almunia said that due to the world economic developments, “economic growth in the EU is becoming more moderate and the downside risks have clearly increased”.
“But thanks to strong world growth and solid economic fundamentals, the negative impact should be limited. On the prices front, inflation should remain moderate but the risks are on the upide”, the Commissioner concluded.