Central Bank warns of tough times ahead

The Central Bank of Cyprus has joined the government and private economists in forecasting a decline in the GDP growth rate for 2008 to 3.6% and 3.7% in 2009 from 3.9% and 3.8% respective forecasts made earlier.
According to the Economic Bulletin, inflation is expected at 4.2% in 2008 driven by the surge in the
prices of oil, food and services. For 2009 inflation is expected to settle at 2.4%.
The Central Bank is also worried about the negative effects from increased borrowing costs and the difficulty faced by some sectors of the economy in meeting the higher instalments required to service their debt. The Central Bank notes that during the first quarter of 2008, the number of personal bankruptcies increased to 272 and at this rate, there is a good chance that the total number of insolvencies will exceed the 821 recorded in 2007.