Cyprus to see slow growth (if any) in ’11; Better in 2012

 — THE FINANCIAL MIRROR CONSENSUS FORECASTS —

* 2011: 0.4% growth / 2012: 1.3% growth *   

This week we launch the first of our Financial Mirror Consensus Forecasts, with five well known economists from the private sector and academia, giving their opinions on which way the economy is heading this year and next.
The range of forecasts in numerical terms is quite wide (ranging from a 0.5% contraction to 1.1% growth in 2011) and a range of 0.8% to 2% for 2012. This range of numbers is inevitable given the low growth rates involved.
Where there is more consensus, however, is in what these economists worry about.
Every single one of them mentions the explosion at Mari that knocked out Vassiliko power station as a factor depressing growth in 2011.
All of them mention either the Greek/eurozone crisis or its impact on Cyprus’s ratings as a negative factor going forward. And many of them fret about the international environment in 2012.
On a more positive note, all economists expect stronger growth in 2012 than in 2011.
Moreover, as well as the many downside risks to the forecasts, such as a worsening of the global outlook or a deepening of the eurozone crisis, some of the economists also mentioned the upside risks (factors that would raise the growth rate).
These include strong structural reforms by the government that will allow us to fund our big financing requirement and prevent further ratings downgrades, the possibility of finding natural gas when drilling starts later this month (assuming Turkey will let it happen) and, if it ever happened, a final resolution of the eurozone crisis.

(SEE FULL REPORT IN OUR PRINT EDITION)

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