Cypriot economy contracted by 5.5% in Q3 2013

The Cypriot economy contracted by 5.5% in the third quarter of 2013, showing signs of resilience despite a Eurogroup decisions for a €10 billion bailout, featuring a haircut of banking deposits, which brought about a major blow to the economy.

According to a flash estimate issued by the Cyprus Statistical Service (Cystat), the GDP growth rate in real terms during the third quarter of 2013 is negative and estimated at -5.5% over the corresponding quarter of 2012, whereas on the basis of seasonally and working day adjusted data, GDP growth rate in real terms is estimated at -5.7%.

The economy contracted by 5.1% in the first quarter and by 5.9% in Q2. However the so far contraction is significantly lower than the estimates of Cyprus` lenders (the European Commission, the European Central Bank and the International Monetary Fund called as the Troika) which have revised downward their projections for a contraction of 7.7% in 2013 compared to initial projection of 8.7%. The Troika also increased its projection for a 4.8% in 2014 compared to the initial projection of 3.7%. However the cumulative contraction for 2013 and 2014 remains essentially the same at 12.5%.