Commission: Cypriot economy returns to positive growth

After the negative record of 2009, when the GDP dropped 1.7%, the Cypriot economy returned to positive growth rates in 2010, which are expected to accelerate over the next two years and approach the average of the Eurozone countries.

According to European Commission projections, Cyprus' GDP will rise by 0.5% in 2010, 1.5% in 2011 and 2.2% in 2012.

Public deficit, despite the global financial crisis, will not worsen in 2010 compared to 2009, when it was around 6% of the GDP. It is expected to reach 5.9% in 2010, 5.7% in 2011 and 5.7% in 2012. All forecasts for 2012 are made based on the 2011 scenario, namely without additional measures.

Furthermore, public debt is expected to rise in 2010, reaching 62.2% of the GDP. In 2011 it will reach 65.2% and it is expected to reach 68.4% in 2012, remaining beneath the average public debt of Eurozone countries.

Regarding unemployment, the Commission says it is expected to drop to 5.9% in 2010, compared to 6% in 2009, and that the downward trend will continue in 2011, reaching 5.7%.

The balance of current exchanges will continue with a deficit in 2010 and the next two years, with 6.1% of the GDP in 2010, 5.7% in 2011 and 5.4% in 2012.

Inflation is projected at 2.8% in 2010, increasing to 3.3% in 2011 and decreasing to 2.5% in 2012.

The Commission's report notes that ''the global economic and financial crisis hit Cyprus through a slump in external demand'' and that ''after five quarters of contracting activity, moderate growth resumed in the first half of 2010.''

''Assuming that current trends continue, the economy will grow by 0.5% this year,'' the Commission adds.

Commissioner for Economic and Monetary Affairs Olli Rehn said the forecasts were ''good news'' because recovery is secured through the increase of domestic demand, employment is improved and public deficits of EU members states continue to drop.