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Cyprus Economy in Deep Crisis

Service : Economy
TEHRAN, April 5 (ICANA) – Three credit-rating downgrades in five months are nudging Cyprus towards the European sin bin for economies falling victim to the lingering international debt crisis.
Tuesday, April 05, 2011 11:07:36 AM
Cyprus Economy in Deep Crisis

And with parliamentary elections due next month, the state of the economy has emerged as the main battleground of the campaign and the subject of a top level seminar to chart the way forward.

Eurostat figures just out show jobless numbers for Cyprus going in the opposite direction to the overall Eurozone pattern - UP not DOWN at 7.2 per cent. - affecting voters under-25 in particular - with nearly 20 per cent of them jobless.

Standard & Poors known worldwide as a leader of financial- market intelligence attributes its latest debt rating cut to the republic's huge exposure to its much larger crisis-hit neighbour, and warns of more to come over the Greek financial fall-out.

But two former finance ministers there is a case for swift action to address structural shortcomings in the economy - specifically concerning public finances.

There has been a little statistical relief to cushion the debt issue.

The government has pulled the country from recession to a modest growth forecast of 1.5% is for the economy this year, buoyed by an increase in foreign deposits over the last 12 months.

And the vital tourist sector has summer bookings up more than 10 per cent due in large part to the political turmoil in north Africa. But that is a just a drop in the ocean when facing the tsunami-like power of the markets.

The central bank plans to set aside a safety fund of 500 million euros to defend the Cypriot economy, but that is not planned to be in place until September - with the elections and further possible downgrades in between..

No matter who succeeds at the polls, recent experience within the eurozone has clearly demonstrated how difficult it is for any economy to escape the spotlight once those invisible market-movers place it on the debt crisis list.

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