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PwC lowers forecasts for CY growth

14/07/2008 11:26
In their latest report, PricewaterhouseCoopers revised negatively their forecasts for the growth of the Cypriot economy. According to PwC, the Cypriot economy is expected to maintain a growth rate of 3.6% in both 2008 and 2009”. However, in their previous report, they expected a growth rate pf 3.9% in 2008 and 4.1% in 2009.

According to the firm, “the Cypriot economy is expected to maintain a strong pace of expansion, growing by 3.6% in both 2008 and 2009. The growth rate is above the expected Euroland average of 1.7% in 2008 and 1.6% in 2009”.

“Cypriot economic growth accelerated to 1% in the first quarter of 2008 due to resilient consumer spending growth and a rebound in investment growth. Since the adoption of the euro on 1 January 2008, exports have contracted while imports have grown strongly”, the report noted.

“The unemployment rate has remained at 3.6% since the turn of the year. This plateauing after months of falling unemployment is an indication that the economy is starting to slow”, it added.

As for inflation, it is a growing concern. “The rate of inflation picked up again in May to 4.6%, above the Euroland average of 3.7%, driven by steep price increases of imported commodities”.

“Looking forward, the immediate positive impact on consumer and business confidence of adopting the euro is expected to abate. Furthermore, exports growth is likely to remain on a downward trajectory due to an appreciating euro as well as a reduction in demand from the rest of the Euroland, Cyprus’s main trading partner”, PwC concluded.