The growth rate of the Cypriot economy is expected to be negative this year, but less than that of the other countries in the euro zone, according to the autumn economic forecast of the European Commission issued here today.
A negative trend is being recorded in the fiscal deficit, which this year will exceed the 3% of GDP ceiling, while the Commission foresees a further increase next year and in 2011.
If the Commission forecast comes true, then, in all likelihood, Cyprus, also, will be in spring under the Community surveillance status system, along with other 13 euro zone countries.
In particular, the GDP will decline this year by 0.7%, while next year it will reach 0.1% and 1.3% in 2011.
The deficit is estimated to reach 3.5% of the GDP by the end of the year, with an increasing trend the next two years (5.7% in 2010 and 5.9% in 2011).
The Commission forecasts for all member countries are based on the current data, meaning that they do not take into account any corrective actions by the governments.
For Cyprus, this year’s deficit will be the third lowest in the euro zone, following Finland and Luxembourg.
Public debt in Cyprus this year will fluctuate at 53.2% of GDP and it will continue rising in the next two years to reach 63.4% of the GDP by the end of 2011.
Inflation, which this year will be at extremely low levels (0.8%), next year will record an increase reaching 3.1%, while it will be cut down to 2.5% in 2011.
Regarding the unemployment rate, an increase of 5.6% of the working population is forecast by the end of the year and further increases in 2010 and 2011 reaching 6.7%.
The negative trend is the result of the downturn in the economy, but in any case, Cyprus will continue to be among the three euro zone countries with the best performance.
In its autumn economic forecast, Commission foresees that the EU economy will emerge from recession in the second half of 2009.
A relatively strong temporary pick-up is in the cards for the near term, following the improvements in the external environment, financial conditions, as well as the significant fiscal and monetary measures – with a more gradual recovery foreseen in 2010-2011, the Commission concludes.
