Trade deficit widens to €4.6bn in January to November

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By Stelios Orphanides

Cyprus’s trade deficit widened 18 per cent in January to November to €4.6bn or by €715.9m compared to the respective period of 2016, the statistical service said.

The deterioration of the foreign trade balance in January to November was on a 14 per cent annual increase of imports which rose to €7.3bn, Cystat said in a statement on its website on Tuesday. The increased imports more than offset a 6.6 per cent increase in exports to €2.7bn.

Imports from other European Union countries rose 0.3 per cent to €4.3bn in the first 11 months of 2017 compared to a year before while exports dropped 19 per cent to €995.1m, Cystat said. Imports from third countries rose 40 per cent to over €3bn, while exports rose 31 per cent to €1.7bn.

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Philippos

    ..and we shall fund this huge deficit, exactly how? It would be interesting to have a deeper analysis reported by CM / Business Mail, ie, what is coming in and what is going out and why this near 20% increase in the deficit for the last 11 month period. Anyway, its not good news, we seem back to consuming more that we say that we are earning!

    • Bob Ellis

      Just looking at the brand new cars, high end smart phones bought as Christmas presents and activity in the malls you would think that 2013 never happened.

      • Philippos

        2013 enabled this. If you borrow huge sums of money and don’t pay it back or you pay something that is “restructured” you can afford to have a phone that is smarter than you

      • Bruce

        But with excessive consumption financed in part by the non-repayment of debt and other obligations Cyprus is well on course for another crisis.

    • Didier Ouzaid

      Possibly, but as a service based economy and without data on FDI or ownership of gvt debt, it’s impossible to say.

    • SuzieQ

      Another warning sign, perhaps?

  • European Citizen

    You can easily observe this situation in the supermarkets. Several years ago Cypriot fruit and vegetable were amazing, ripe, juicy, and most importantly times cheaper than imports. Now, I don’t know what changed – but the same fruit is dry inside and absolutely tasteless. I am talking about oranges specifically here.

    So lately, I have switched over to buying Israeli fruit. They are much juicier, although visibly have been frozen and then thawed.

    I think this observation is key to interpreting the increase in trade deficit. Our economy is dying… Local agriculture is losing the battle every day. Their techniques and costs (taxes) are not competitive in the open market. This is a very sad truth.

    Remember, our economy is largely reliant on tourism and services. Legal and banking services for foreigners will likely be counted as Import, since money to pay for them is coming from foreign accounts. So under this observation, we can argue that the deficit increase is due to the revival of the tourism industry. This is indeed the case, since there were visibly more tourists this summer than four years ago.

    All in all, this deficit will keep rising if our economy is not fixed. Any agricultural and manufacturing taxes must be scrapped for local producers. This will draw in large investments into self-sufficient sectors, and will in turn, make the country more self-sufficient.

    Legal and banking businesses must be taxed at a rate of 10-30% on their profits to discourage the contributions towards raising the deficit even further. Same should apply to the infamous construction sector.

    If all this happens in Cyprus, we may look to our bright and green future. However, I strongly believe it is not in the interests of the self-serving government, since they rely on the incomes from the legal and banking industries all too much.

    • Philippos

      ..and we are running out of water, so maybe we could concentrate on dried frooits? Anyway who wants to work in agriculture or husbandry when you can be a Biziness Man and become obese and cheat people, maybe even become a politician..Ooops sorry that’s reserved for Lawyers and becoming a Lawyer does require a bit of effort, rather less in Ellada than Britain mind you and then you learn the “wrong” Law, so now you can see why its such a bloody mess

  • Kevin Ingham

    This will be the visible trade deficit and Cyprus is always going to have that

    It imports cars, oil, etc but exports very little tangible goods.

    It will be offset by the “invisibles”, which will be the cash flows into the country from such as tourism, property sales, borrowings and passport sales

    Balance of payments are an accountancy double entry system and as such they will balance out.

    It’s how the visible trade deficit is being financed and how sustainable that is which gives you the indication of how serious a problem or otherwise a trade deficit actually is- and there is nothing in the article to indicate that

    At the moment it is being financed by tourism and the passport led construction process- neither of those are guaranteed increasing earners in the future and is masking a lot of underlying problems which are not being addressed

    • Bruce

      Note that receipts from tourism estimated statistically from interviews with tourists at airports are considerably inflated in that a not insignificant proportion of the due proceeds to hoteliers from foreign agents are kept abroad and that part of the reported tourist expenditures are spent in the North.
      Also the large interest payments on the huge external debt of Cyprus need to be financed from net services receipts and foreign capital inflows making the Republic quite vulnerable to a balance of payments crisis, especially if the current surge in imports continues.