GDP revisions improve prospects for full year

Real GDP rose by 3.7% year on year in the second quarter and by 1.0% when compared with the previous quarter on a seasonally adjusted basis.

The 1% quarterly growth rate was exactly that rate predicted by the Financial Mirror last June, although revisions to earlier figures have improved the prospects for the full year.

First quarter revised up

The Statistical Service Cystat revised up its initial estimate for the first quarter to 0.8% from 0.4% previously. The year-on-year rate was revised up to 3.4% from 3.3% previously. Cystat also revised both up and down the growth rates in individual quarters in 2005.

The net result is that there was only very small slowdown in the first quarter, rather than the sharp slowdown which the initial figures last June had suggested.

The second quarter, meanwhile, saw a slight acceleration, from 0.8% in the first quarter to 1% quarter-on-quarter growth in the second.

Financial services boom

As before, the Financial Mirror’s core readers are the main drivers of the Cyprus economy. Cystat noted that financial intermediation services rose year on year by 19.4% in the second quarter, while tourist arrivals rose by only 2.6% year on year.

Tourism revenue rose by 8.3%, building permits in the first 5 months by 5.9%, wholesale and retail trade by 8.2%, telecommunications by 2.8%, air transport by 6.7%, electricity production 7.8%, imports of goods 22.1%, registration of private saloon cars by 0.5%, while manufacturing declined by 2.1% and exports of goods decline by 10.9%.

Perhaps 3.7% for the whole of 2006

According to Financial Mirror calculations, if the economy continues to grow by 1% quarter on quarter for the rest of the year, then growth should reach a respectable 3.7% for the whole of 2006.

This is lower than the government’s forecasts of around 4%, but is higher than figures suggested earlier in the year.

Fiona Mullen