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Cyprus recession deepens after bailout

Cyprus's struggling economy went deeper into recession in the second quarter, contracting 5.4 percent from a year earlier.

Cyprus bailout eurozone details march 25 2013Enlarge
(Milos Bicanski/AFP/Getty Images)

Cyprus's struggling economy went deeper into recession in the second quarter, contracting 5.4 percent from a year earlier, according to an official flash estimate on Wednesday.

That compared with a 4.8 percent year-on-year drop in Gross Domestic Product in the first quarter.

The decline in the April-to-June period, the eighth successive quarterly fall, is the first to measure the economy's performance since a March deal with the European Union and the International Monetary Fund to rescue the economy.

The latest estimate showed that GDP shrank 1.4 percent from the first quarter, when it fell by 1.7 percent.

Tourism revenue helped blunt the effects of the downturn but arrivals have dipped in recent months to thwart official predictions of another bumper year in the key sector.

The statistical service said construction, manufacturing, banking, transport, trade, tourism and services all declined from April to June.

In May, Cyprus received its first tranche of a 10 billion euro ($13.3 billion) rescue package negotiated with the European Commission, European Central Bank and International Monetary Fund to bail out its troubled economy and oversized banking system.

The deal also involved the closure of the island's second-largest bank and a large "hair cut" on deposits above 100,000 euros at the largest.

The country is now waiting for its next instalment of cash which needs to be approved by eurozone finance ministers following a recent visit by the troika to carry out its first review of the adjustment programme.

According to the troika's projections, the Cypriot economy is expected to contract 8.7 percent this year and 3.9 percent in 2014 before recovering 1.1 percent in 2015.

http://www.globalpost.com/dispatch/news/afp/130814/cyprus-recession-deepends-after-bailout