Growth forecast unchanged

According to the Ministry of Finance (MoF) Cyprus’ economic growth is expected to remain unchanged in 2006 compared to the previous year despite the hike in oil prices. GDP growth rate in constant prices is expected to continue its upward trend due to increased domestic consumption demand and particularly private consumption and investment activity. Specifically, it is expected to reach 3.9% of GDP in 2007 and continue to grow at an annual rate of 4.1% of GDP during the period 2008-2010.

The harmonized inflation rate (HICP) seen at 2.4% for 2006 is forecast to remain steady until 2008 and then ease lower to 2% by 2010.

Unemployment, seen in 2006 at 4.8% is forecast to edge lower to 4.7% mid-2007 then to 4.5% by mid-2009.

The Current Account balance, estimated at a 6.4% deficit to GDP in 2006 is forecast to decline to 4.2% deficit by 2010.