Greek Cyprus economy moves deeper into recession

NICOSIA - Agence France-Presse

Cypriots protest against austerity measures in a demonstration outside the parliament in Nicosia, September 5, 2013. REUTERS Photo

Greek Cyprus’s struggling euro economy moved deeper into recession in the second quarter, contracting 5.9 percent from a year earlier, according to an official estimate on Sept.6.

The figure was worse than the 5.4 percent flash estimate issued last month for second quarter.

The 5.9-percent contraction compared with a 5 percent year-on-year drop in Gross Domestic Product in the first quarter, adjusted data showed on Sept. 6.

It is reported to be the largest contraction of the crisis-hit Greek Cyprus economy since the mid 1970s.
The GDP data announcement came a few hours after the Parliament approved 14 troika-requested bills to raise revenue and restructure the banking system to ensure Nicosia receives its second disbursement of 1.5 billion euros.

According to troika projections, the Greek Cypriot economy is expected to contract 8.7 percent this year and 3.9 percent in 2014 before recovering 1.1 percent in 2015.

The decline in the April-to-June period, the eighth successive quarterly fall, is the first to measure the economy’s performance since a March deal with the European Union and the International Monetary Fund to rescue the economy.

The latest estimate showed that GDP shrank 1.8 percent from the first quarter, when it fell by 1.7 percent.

Tourism revenue helped blunt the effects of the downturn, but arrivals have dipped in recent months to thwart official predictions of another bumper year in the key sector.

The statistical service said construction, manufacturing, banking, transport, trade, tourism and services all declined from April to June.

In May, Greek Cyprus received its first tranche of a 10-billion-euro ($13.3-billion) rescue package negotiated with the European Commission, European Central Bank and International Monetary Fund to bail out its troubled economy and oversized banking system.

The deal also involved the closure of the island’s second-largest bank Laiki and a large “haircut” on deposits above 100,000 euros at the largest lender, the Bank of Greek Cyprus.

The country is now waiting for its next installment of cash which needs to be approved by eurozone finance ministers on September 13 following a recent visit by the troika to carry out its first review of the adjustment program.