NICOSIA, Feb. 13 (Xinhua) — The European Commission said Monday that bailed-out Cyprus is experiencing a solid economic recovery and its economic growth is expected to be robust over the next few years.
The Commission’s winter economic forecast for Cyprus, made available in Nicosia, said a growth of 2.5 percent can be expected this year, with a further 2.3 percent in 2018, slightly lower than the projections of the Ministry of Finance.
Last month, a forecast by the Economics Research Center (ERC) of the state University of Cyprus funded by the European Union said it expected the Cypriot economy to expand by 3.1 percent this year.
Local projections on the economy have proved to be more accurate than those of EU and international rating agencies.
Cyprus was pulled back from the brink of bankruptcy in a 10-billion-eruo (10.6 billion U.S. dollars) bailout deal that also involved a radical resolution of the Cyprus problem.
The European Commission said that almost four years after the bailout, Cyprus economy received a boost by an increase in private consumption, increasing employment, increasing exports and a record-high tourism season that saw 22 percent more tourists arriving in 2016 than the previous year.
It added that a stabilizing real estate market, together with increased foreign direct investment, is likely to provide some lift for investment.
But it warned that banks are still burdened with a very high share of non-performing loans and credit remains scarce.
The Commission said that Britain’s eventual exit from the European Union, as well as the geopolitical situation in competing tourist destinations, present risks to the outlook of Cyprus’s economy.
It also said that the public debt remains high but declining and is expected to fall just below 100 percent of GDP in 2018 as a result of better primary surpluses of the government’s finances.
