GDP sees 4.1% con­trac­tion in Q1

Financial Mirror (Cyprus) - - FRONT PAGE -

Cyprus GDP con­tracted by 4.1% in sea­son­ally ad­justed terms, dur­ing the 1st quar­ter of 2014, com­pared with the same quar­ter in 2013, which com­pares favourably with the pre­dic­tion 4.8% an­nual con­trac­tion that is in­cluded in the third re­view of the eco­nomic ad­just­ment pro­gramme, the Fi­nance Min­istry an­nounced on Mon­day. Un­em­ploy­ment, in monthly sea­son­ally ad­justed fig­ures, in­creased from 14.8% in March 2013 to 17.4% in March 2014, re­flect­ing the ef­fect of a pro­tracted slow­down in eco­nomic ac­tiv­ity, the Min­istry said. Ac­cord­ing to the Min­istry’s cal­cu­la­tions, dur­ing the first four months of the year tourist ar­rivals in­creased by 1.4% com­pared to the same pe­riod in 2013 and rev­enues from tourism in Jan­uary-Fe­bru­ary 2014 in­creased by 4.8% com­pared to Jan­uaryFe­bru­ary 2013.

Also in­fla­tion de­creased at a rate of -0.4% in April 2014 com­pared to -0.9% in March 2014 and for 2014 it stands so far at -1%.

Ex­ports of goods in­creased by 2.8% in Jan­uary-March 2014 com­pared to the same pe­riod in 2013.

The Fi­nance Min­istry said the gen­eral govern­ment budget bal­ance was in deficit dur­ing the first quar­ter of 2014, of EUR 20 mln (-0.1% of GDP) com­pared to tar­get deficit of EUR 143 mln (-0.9% of GDP). The pri­mary bal­ance was in sur­plus dur­ing the same quar­ter, of EUR 104 mln (0.7% of GDP) com­pared to tar­get deficit of EUR 5 mln (0% of GDP).

To­tal rev­enue reached EUR 1,567 mln dur­ing the first quar­ter of 2014, ex­hibit­ing an im­prove­ment of EUR 84 mln vis-a-vis the fore­cast and to­tal ex­pen­di­ture reached EUR 1,587 mln, ex­hibit­ing a de­cline of EUR 39 mln vis-à-vis the fore­cast.

In ac­cor­dance with the up­dated macroe­co­nomic sce­nario, the budget bal­ance is es­ti­mated to reach a deficit of 5.3% of GDP in 2014 com­pared to a deficit of 5.4% the year be­fore and pri­mary bal­ance is es­ti­mated to ex­hibit an im­prove­ment vis-à-vis last years’ level, as a per­cent­age to GDP, fall­ing to about -1.7% in 2014 from -2% the year be­fore. The Min­istry said the govern­ment debt re­mained sta­ble at EUR 18.45 bn at the end March 2014 vis-a-vis EUR 18.4 bn at the end of De­cem­ber 2013. Short term debt yields have been fol­low­ing a down­ward trend dur­ing first quar­ter of 2014 drop­ping from 4.72% at the end of Q4 2013 to 4.48%, whereas long term bond yields con­tin­ued to drop dras­ti­cally dur­ing the same quar­ter and through April, with rates drop­ping around 5% for the first time since July 2011, it added. The Min­istry said it continues with the im­ple­men­ta­tion of the roadmap for the grad­ual re­lax­ation of the re­stric­tive mea­sures on cap­i­tal flows and cur­rently it has com­pleted stage 2 of the roadmap and has started im­ple­ment­ing mea­sures in stage 3. As from the 30th of May 2014 all re­stric­tive mea­sures on do­mes­tic trans­ac­tions were lifted, it added.

The Min­istry said that the next Pro­gramme dis­burse­ments are sched­uled in June-July 2014 from the ESM (EUR 600 mn) and the IMF (es­ti­mated around EUR 85 mn), whereas the 4th Pro­gramme tranche was dis­bursed in April 2014 amount­ing to a to­tal of EUR 233 mn.

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