Hellenic Bank: how will 2015 compare to 2014 for Cyprus’ economy

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Hellenic bank’s quarterly economic forecasts have revealed that due to the delays in the implementation of the reform programme with international creditors, Cyprus’ economy may not return to growth next year. Other factors affecting the growth are the public discussion over abandoning the memorandum of understanding, as well as the negative outlook for Russia’s economy.
Hellenic bank’s quarterly economic forecasts have revealed that due to the delays in the implementation of the reform programme with international creditors, Cyprus’ economy may not return to growth next year. Other factors affecting the growth are the public discussion over abandoning the memorandum of understanding, as well as the negative outlook for Russia’s economy.

Unemployment is forecasted to fall to 15% in 2015 from 16% this year, while consumer prices are forecasted to grow only 1% after a zero inflation rate this year. The economy is likely to remain constant while growing or even shrinking by as much as 0.5%, the lender said in its statement.

In the first three quarters of the year, the government in Cyprus generated a surplus of almost 200 million euros. For the entire year, the Troika (which includes the IMF, the European Central Bank and the European Commission) who are supervising the bailout in Cyprus forecast a fiscal deficit of 4.2%. Finance Minister Harris Georgiades revised this figure to 2.5% of gross domestic product. On November 12th, Mr Georgiades stated that Cyprus would not be abandoning its programme and economic reform agreed, even if it achieves sustainable development before mid-2016.

While ‘great efforts have also been made’ to stabilise the financial sector such as dealing with non-performing loans, ‘the latest developments in the modernisation of legislation on insolvency will be a key factor in dealing with strategic defaults and, therefore effectively dealing with the increase in problematic loans’, Hellenic said.