Georgiades expects economy to expand 2.2%, fastest since 2009

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By Stelios Orphanides

Finance minister Harris Georgiades said that he expects the Cypriot economy to grow at 2.2 per cent growth rate this year, the highest since 2009, the Cyprus News Agency reported.

The new rate projection, which revises upwards a previous 1.5 per cent forecastt, is expected to be approved at a cabinet meeting on Friday, the finance minister, who was talking at a conference in London on Thursday, said, according to the Cyprus News Agency.

“Tomorrow, the medium term plan for the next three-year period will be submitted, which will place growth between 2 per cent and 2.5 per cent and 2.2 per cent for the year,” Georgiades was quoted as saying by the Cyprus News Agency.

Cyprus’s economy grew last year 1.6 per cent, after plunging in 2012 in a prolonged recession that caused unemployment to increase and peak at over 16 per cent. In March, Cyprus completed its adjustment programme it agreed with international creditors after using less than three quarter of the €10bn in bailout funds made available.

Georgiades said that Cyprus’s banking sector, though smaller, stands on stronger foundations today adding that decisive action to balance the government budget ensured that Cyprus’s tax regime remained attractive.
“The economy has stabilised and exited prolonged recession (and) is recording satisfactory growth rates,” Georgiades said. “Subsequently, the prospects are positive but under the fundamental precondition that the reform effort, the prudential fiscal management and efforts to strengthen Cyprus’s comparative advantages continue. The dominating message at this conference was that Cyprus’s economy has indeed turned the page which is highlighted by the comparative advantages of productive sectors”.

The finance minister added that the economic recovery is due to the economy’s resilience and the competitiveness of some of its key sectors as well as the calm and reasonable way citizens behaved allowing the government to implement needed reforms. The high unemployment rate, the non-performing loans and bureaucracy continue to plague the economy, he said.

Georgiades said that Cyprus should avoid complacency in dealing with non-performing loans, which make up half of the banks’ loan portfolio. “Managing the problem will be firstly facilitated by a growing real economy and, secondly, by a systematic effort by the banks and borrowers towards viable restructurings. I am cautiously optimistic that this effort has started and results are already visible”.

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