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Reducing trade deficits and credit growth

Reducing trade deficits and credit growth

02.09.2015
Tags: Economics, Statistics, GDP

Cyprus trade deficit fell to 839,9 million euros in January-March this year with 1076 million euros in the first quarter 2012 year, reported the Cyprus Statistical Office / CYSTAT /.

The volume of imports in January-March amounted 1176 million euros compared with 1401 million in the first quarter of the year 2012. Total exports increased to 336,6 million euros compared with 324,4 million euros in the January-March 2012 year. In April, the volume of Cypriot imports continued to decline, reaching 356,8 million euros against 378,2 million euros in March. Cypriot exports, in turn, continued to grow, rising to 195,78 million euros compared with 116,3 million euros in the previous month.

Progress in foreign trade helped improve somewhat Cyprus GDP, but the result still appeared sad. CYSTAT last week reported that the gross domestic product of Cyprus for the first quarter of this year in real terms fell by 4,4 percent compared with the first quarter of the year 2012. In the fourth quarter 2012 year decline in GDP was 3,3 percent versus the same period of the previous year.

Particularly noticeable contraction of the financial sector in Cyprus. According to the Central Bank of Cyprus, from January to March, the volume of deposits in Cypriot banks declined by almost 5 billion euros, but only for April was derived more 6 billion Thus, four months deposits "thinner" at 16-plus percent to less than 57,4 billion euros. At the same time from a specified amount of deposits 37,5 percent of funds were forcibly converted into government bonds, and more 22,5 percent were trapped in the accounts.

Nevertheless, the issuance of loans by Cypriot banks to the non-financial sector continues to grow, although the growth rate has decreased from 5,7 percent year-on-year in January to 1,2 percent in April. So there is no panic in the Cypriot financial market, however, the general economic situation is deteriorating slowly but surely. 3 June, the international rating agency Fitch lowered the long-term issuer default rating of Cyprus by one level with a "negative" forecast. The decision is quite understandable: according to the Cyprus Ministry of Finance, unemployment in the country is growing, retail sales are declining since January of the year 2012, the financial transactions of the Cypriots are declining since September of last year, as well as consumer lending volumes. For a year and a half, the number of registrations of new companies has been reduced almost without a break.

Under the baseline scenario of the Ministry of Finance of Cyprus, GDP in the current year will be reduced by 8,7 percent in 2014 year - another 3,9 percent, and then begin to grow: at 1,1 2015 percent in the year and 1,9 2016 percent in the year. Unemployment this year will rise to 15,5 11,8 percent percent from last year and will peak in 16,9 percent of the working population in 2014 year. The budget deficit will decline from 11,7 percent in the year to 2012 2 percent this year and to 1 percent - in 2016 year. The main driver of growth in the Ministry of Finance of Cyprus considers international business, which is expected to officials in the coming months should return to the island.

Source: ITAR-TASS

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