NICOSIA – After almost four years – including a bailout and capital controls – Cyprus’ economy has come back, showing growth in the first quarter.
Official figures released May 13 showed an expansion of 1.6% in an indicator that tough austerity measures and big losses suffered by depositors, who lost nearly half of accounts over 100,000 euros, has paid off for the government if not the people.
It was the first time the Cypriot economy had grown since the second quarter of 2011 and came after a contraction of 0.4% in the fourth quarter of 2014.
Seasonally adjusted data showed that year-on-year the economy grew 0.2% compared to a 1.8% retreat in 2014.
Finance Minister Harris Georgiades hailed an “important development which underlined the positive prospects of the Cyprus economy.”
He said there was a “long way to go” as the recovery was at an embryonic stage and therefore remained “fragile”.
“For this reason we must continue our joint effort to reform and consolidate the economy and refrain from premature celebration, but also avoid negativity,” he added.
“We have some way to go. Recovery is at its early stages, and is therefore fragile,” he said in a written statement.
Private demand grew in the first quarter, focused on trade, the hospitality industry and professional services, the statistics department said. Manufacturing and construction saw a decline in output, it added.
Earlier this month, the European Commission forecast Cyprus’ economy would contract 0.5% this year and grow 1.4% in 2016.
The state statistical service said there were positive growth rates in hotels, trade, restaurants, electricity, health, education, legal and accounting services in the first quarter, RTE reported. But there was a contraction in construction and manufacturing.
Two years ago, the government had to ask the international lenders for a 10 billion euro bailout that came with tough conditions prompting protests and demonstrations and the closing of one state bank.