Hellenic Bank projects 4.2% growth in 2018

Hellenic Bank estimates that the Cypriot economy will grow at a rate of 4.2% in 2018.

The Bank expected growth to be supported by private consumption and investment and by an improving and robust labour market.

It said that unemployment is expected to decline to 9.2% in 2018, while inflation to remain at relatively low levels, at around 0.5%.

In the Economic Review for the first quarter 2018, the Economic Research Department states that while consumption continued to be a key recovery driver, investment demand also rebounded, particularly for large construction and infrastructure projects.

As explained in the report, private consumption was also supported by the flourishing tourism sector with positive spillover effects in other sectors of the economy.

According to the economic review, despite the important steps taken towards restoring the positive economic climate, some degree of uncertainty remains, as the country still has certain issues to resolve, such as the high level of NPEs, high unemployment, the high ratio of public debt to GDP, which together render Cyprus vulnerable to negative shocks and delays in the advancement of structural reforms. The high private indebtedness levels that have led to deleveraging including the high level of NPEs, continue to pose significant risks to the stability of the domestic banking system and to the outlook for the economy, the report notes.

The improved macroeconomic environment is expected to support banks’ efforts to tackle the high level of delinquent loans. The modernization of the legislation on the insolvency and foreclosure framework which is now in place will be an invaluable tool towards this direction, it says.

Source: Cyprus News Agency