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IMF expects Cypriot economy to grow 1.6% in 2016, 2% next year

By Stelios Orphanides

The International Monetary Fund expects Cyprus’s economy to grow 1.6 per cent in 2016, same pace as it did last year, before growth accelerates to 2 per cent in 2017.

This year’s growth will bring the unemployment rate down to 14 per cent, from 15.3 per cent in 2015, the IMF said in its World Economic Outlook report on Tuesday.

The IMF, which together with European Union institutions financed and supervised Cyprus’s economic adjustment programme which ended in March, expects consumer prices to rise 0.6 per cent this year after falling 1.5 per cent last year, before inflation rises to 1.3 per cent in 2017.

Cyprus’s current account balance will generate a 4.8 per cent deficit in 2016, down from a 5.1 per cent deficit last year, the IMF said. In 2017, the deficit is projected to narrow further to 4.7 per cent.

The IMF said that the euro area’s economic growth rate is expected to slow down this year to 1.5 per cent before accelerating to 1.6 per cent next year, the same rate of growth as 2015.

The economy of the UK, Cyprus’s largest source of incoming tourism, is expected to grow 1.6 per cent this year, before growth picks up to 2 per cent next year, the IMF said. Russia’s economy, Cyprus’s second tourist market, is expected to shrink 1.8 per cent this year, less than half the contraction rate of 2015, before it starts to grow again in 2017 with 0.8 per cent.

Growth for the US economy, the world’s largest, is expected to remain firm at 2.4 per cent in 2016 and accelerate to 2.5 per cent next year. The second largest economy, China, is expected to slow down to 6.5 per cent this year, from 6.9 per cent in 2015, and to 6.2 per cent in 2017, the IMF said. The world economy is expected to expand 2.5 per cent this year and 2.9 per cent in 2017.

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