Cyprus falls deeper into recession in Q2

**Fourth straight q/q decline**

As expected, the Cyprus economy fell deeper into recession in the second quarter, with real GDP declining on a seasonally adjusted basis by 2.4% compared with the same period of the previous year, after a drop of 1.5% in the first quarter.
On a non-seasonally adjusted basis GDP fell by 2.3%, from 1.5% in Q1.
On a quarterly basis, the economy has now recorded its fourth quarter of contraction, with GDP declining compared with the previous quarter by 0.8% on a seasonally adjusted basis, from 0.4% n the first quarter.
A technical recession is recorded after two straight quarters of q/q decline.
Full data will be released in about four weeks. The Statistical Service indicated that that decline was broadbased, with declines in construction, manufacturing, electricity, wholesale and retail trade, and transport.
On the other hand, there were positive growth rates for tourism and, despite the capitalisation crisis that has hit business confidence, banking.
Cyprus applied for financial support from the European Financial Stability Facility (EFSF) on June 29, having been locked out of financial markets since May 2011.
However, the government has yet to agree to the terms.
The EFSF is needed partly to shore up the capital of its two largest banks, which were badly hit by the writedown of Greek sovereign debt, but also cover some EUR 4.5 bln of government financing needs to the end of 2014.
Estimates for the total amount required range from EUR 11 bln to EUR 15 bln (around 60% to 80% of GDP).
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