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European Commission expects 2016 Cypriot economy to grow 1.5%

By Stelios Orphanides

Cyprus’s economy will grow 1.5 per cent in 2016, a slightly faster rate compared to the 1.4 per cent growth rate expected for 20015, the European Commission said.

Growth will further pick up in 2017 when the Cypriot economy is expected to expand by 2 per cent, which will help bring unemployment on a downward trajectory, the European Commission said in a statement on Thursday.

Unemployment is expected to drop to 14.5 per cent in 2016 from 15.5 per cent last year and to 13.2 per cent in 2017. The harmonised consumer price index is expected to rise 0.2 per cent in 2016 and 1.3 per cent in 2017 after falling 1.6 per cent last year.

The European Commission said that it expects the government to generate a fiscal deficit of 1 per cent of economic output in 2015 before it produces a 0.1 per cent surplus this year and 0.4 per cent in 2017. Government debt is expected to drop to 99.9 per cent this year, after peaking at 108 per cent in 2015, before it further drops to 95 per cent next year. “The peak has been shifted from 2014 to 2015, as the debt-decreasing impact of certain initiatives is now expected to kick-in only in 2016,” the Commission said.

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