Cyprus economic downturn contained to 5.3% in Q4

Cyprus economy is on track to beat the projections of its international lenders, as the economic downturn in the fourth quarter of 2013 was limited to 5.3% of GDP, according to a flash estimate issued Friday by Cyprus Statistical Service (Cystat).

If confirmed by the final data, the 2013 GDP contraction will be limited to 5.4%, compared with the projections of Cyprus lender`s for a steep downturn of 7.7% as revised during the second review. In its initial estimates, the Troika (European Commission, European Central Bank) projected a downturn of 8.7%.

A senior European Commission official said last week that Cyprus is the only programme-country to outperform its fiscal targets.

Cyprus has been in recession since Q2 2011. Faced with the collapse of its banking sector, Cyprus and the Troika agreed last March on a €10 billion bailout that featured an unprecedented haircut on deposits over €100,000, coupled with strict capital controls that hampered economic activity. So far Cyprus had three positive programme reviews whereas restrictions have been gradually eased.