The Cyprus economy is expected to face a more favourable environment during 1994, in comparison to 1993, mainly due to the anticipated further recovery in the E.U. member countries and particularly in Britain. The sectors interlinked with tourism are expected to be the main beneficiaries. A partial rebound of economic activity is also expected in the manufacturing sector, however, the prevailing structural problems are likely to prevent a full exploitation of the improvement of the external environment.

Bearing the above in mind, G.D.P. is projected to attain a respectable growth of the order of 3-3,5%, while full employment conditions will be maintained with the unemployment rate remaining in the region of 2,5-3%. Underlying inflation, (excluding the effect from the increase of the V.A.T. rate and of other indirect taxes), is expected to exhibit a small increase from the relatively low level of 3-3,5% in 1993 to 4% in 1994, which corresponds to the medium term trend of the Cyprus economy. The current account is expected to remain in surplus, albeit lower than in 1993, leading to a further build up of foreign exchange reserves and a decrease of foreign debt and of the debt service ratio. Despite the fact that prospects for 1994 appear to be somewhat more favourable compared to 1993, nevertheless full recovery of the Cyprus economy will involve deep cuts and the cooperation of all social partners.

Source: www.kypros.org