Next year could be worse or no better, say 5 of 6 Cyprus economists

THE FINANCIAL MIRROR CONSENSUS FORECASTS

This week we publish the second of our quarterly Financial Mirror Consensus Forecasts, with six well known economists from the private sector and academia, giving their opinions on which way the economy is heading this year and next.
This quarter, there is greater consensus among the economists over the future direction of the economy than there was last quarter, when we were unsure about the impact of the Mari explosion that knocked out the country’s main power station.
The spread of forecasts for 2011 is therefore narrower than last quarter, ranging from a low of -0.1% (contraction) to a high of 0.5% (growth).
A little but further into the future, there is inevitably a wider range of opinions. The forecast for 2012 ranges from a high of 0.8% (growth) to a low of -1% (contraction).
However, all but one of the forecasters expects next year to be worse than this one. The average growth rate forecast for 2011 is 0.2%, while the average for 2012 is a negative -0.2%.
This is primarily because there remains a lot of concern about the eurozone crisis, its impact on the banks, lending and what it means for government borrowing costs.
On the other hand, the economists note that a reduction in the fiscal deficit and the possibility of future gas revenue might act positively on sentiment.

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