euro

Cyprus GDP expected to grow, inflation to continue decreasing

by
Cyprus GDP expected to grow, inflation to continue decreasing

The European Commission’s interim winter forecast indicates that Cyprus is expected to see its GDP grow by 2.8% in 2024 and by 3% in 2025. Inflation in Cyprus is forecasted to slow to 3.9% in 2023, down from 8.1% in 2022, and is expected to be further contained to 2.4% in 2024 and 2.1% in 2025. The main drivers of GDP growth in Cyprus are strong domestic demand, strategic investments, and lower energy prices. The Recovery and Resilience Mechanism is expected to support investments that will strengthen growth. Economy Commissioner Paolo Gentiloni presented the winter forecast, noting that the European economy is entering 2024 on a weaker footing than previously predicted. The EU and eurozone growth forecasts for 2023 have been revised to 0.5%, and for 2024, they have been adjusted to 0.9% in the EU and 0.8% in the eurozone. The commission predicts an increase in economic activity in 2025, with growth of 1.7% in the EU and 1.5% in the eurozone. Inflation in the EU is expected to decrease from 6.3% in 2023 to 3.0% in 2024 and further to 2.5% in 2025. In the Eurozone, inflation is projected to slow from 5.4% in 2023 to 2.7% in 2024 and to 2.2% in 2025. The contribution of net exports to Cyprus’ economy is expected to remain weak due to economic uncertainty in trading partners and strong demand for imports. Real GDP growth in Cyprus slowed to 2.5% year-on-year in the first three quarters of 2023, but tourism services demand continued to recover. Economic activity in the EU is expected to pick up in 2024 after a weak start to the year. Lower energy prices have led to a faster-than-expected decline in headline inflation in 2023. The forecasts are subject to uncertainty due to geopolitical tensions and the risk of conflict expansion in the Middle East. Rising shipping costs due to trade disruptions in the Red Sea are expected to exert only a slight influence on inflation. Risks to core growth and inflation forecasts include consumption, wage growth, profit margins, interest rates, and the impact of extreme weather events due to climate change.

Cyprus GDP expected to grow, inflation to continue decreasing

by
Cyprus GDP expected to grow, inflation to continue decreasing

The European Commission’s interim winter forecast predicts that Cyprus will see further growth in its Gross Domestic Product (GDP) in 2024, with an expected rise of 2.8 percent, and an increase of 3 percent in 2025. Inflation in Cyprus is forecasted to slow to 3.9 percent in 2023, down from 8.1 percent in 2022, and is expected to be further contained to 2.4 percent in 2024 and 2.1 percent in 2025. The main driver of GDP growth in Cyprus is projected to be strong domestic demand, with significant contributions from strategic investments and lower energy prices. Growth is also expected to be supported by investments from the Recovery and Resilience Mechanism. However, net exports are expected to contribute weakly to the economy due to economic uncertainty in Cyprus’ main trading partners and strong demand for imports driven by investments. The European Commission revised the growth forecasts for the EU and the eurozone for 2023 to 0.5 percent and adjusted the 2024 forecasts to 0.9 percent for the EU and 0.8 percent for the eurozone. Inflation in the EU is forecasted to decrease from 6.3 percent in 2023 to 3.0 percent in 2024, and further to 2.5 percent in 2025. In the Eurozone, inflation is projected to slow from 5.4 percent in 2023 to 2.7 percent in 2024, and to 2.2 percent in 2025.

EC revises Cyprus GDP growth forecast upwards for 2024-2025

by
EC revises Cyprus GDP growth forecast upwards for 2024-2025

The European Commission has published its Winter 2024 Economic Forecast, which lowers the growth outlook for this year and sets inflation on a lower downward path than projected last autumn. In Cyprus, real GDP growth slowed down to 2.5% in the first three quarters of 2023 compared to 5.8% for the same period in 2022. However, demand for tourism services continued to rebound in 2023, with arrivals increasing by 20.1%. Private consumption remained robust, supported by real wage increases and employment growth. For the whole of 2023, economic activity is expected to have grown by 2.4%. In 2024 and 2025, real GDP in Cyprus is expected to grow by 2.8% and 3% respectively. Harmonized index of consumer prices (HICP) inflation in Cyprus is set to moderate to 2.4% in 2024 and 2.1% in 2025.

Explainer: European banks and their $1.5 trillion commercial property headache

by
Explainer: European banks and their $1.5 trillion commercial property headache

European banks have approximately 1.4 trillion euros (.50 trillion) in loans to the troubled commercial property industry. German banks, in particular, are heavily exposed due to the country’s worst real estate slump in decades. Commercial property prices have dropped in Germany and across the euro area. Deutsche Bank has the most outstanding loans to the sector among German banks, followed by two state-backed Landesbanken. Deutsche Pfandbriefbank (PBB), one of Germany’s top property financiers, has 5 billion euros tied up in the U.S. commercial market. The outlook for the real estate market is bleak, with experts predicting a continuing downturn.

Steinmeier calls for , ‘bold steps’ and compromise

by
Steinmeier calls for , ‘bold steps’ and compromise

Germany’s President Frank-Walter Steinmeier has called for both sides in Cyprus to show a willingness to compromise and take bold steps to find a solution. He expressed support for the resolution of the Cyprus issue and emphasized Germany’s support for a bi-zonal bi-communal federation within the framework of the United Nations. Steinmeier also praised Cyprus’s role as a safe harbor for the European Union and highlighted the need for Turkey to address the Cyprus problem in relation to its approach to the EU. The Cypriot President Nikos Christodoulides stated that the current state of affairs in Cyprus is unacceptable and that the key to a solution lies with Ankara. He called for the European Union to play a more active role in resolving the Cyprus problem and expressed hope for the reunification of Cyprus. The two presidents also discussed bilateral relations, including cooperation on defense, economics, and energy. Steinmeier commended Cyprus’s contribution to the evacuation of German citizens from Israel and expressed support for the EU’s stance on Ukraine. He also addressed the issue of immigration, with Steinmeier acknowledging the burden faced by Cyprus and calling for a common European asylum system.

IMF says global ‘soft landing’ in sight, lifts 2024 growth outlook

by

The International Monetary Fund (IMF) has upgraded its forecast for global economic growth, citing faster-than-expected easing of inflation. The IMF’s chief economist, Pierre-Olivier Gourinchas, stated that a “soft landing” was in sight, but overall growth and global trade still remained lower than the historical average. The IMF forecast global growth of 3.1% in 2024, up from its previous forecast of 2.9%, and expected global trade to expand by 3.3% in 2024. However, risks such as geopolitical tensions in the Middle East and attacks in the Red Sea could disrupt commodity prices and supply chains. The IMF also warned that delays in fiscal consolidation and the potential violation of global trade rules by certain countries could impact economic activity.

UK still undecided on digital cash as privacy concerns persist

by
UK still undecided on digital cash as privacy concerns persist

British authorities will decide no earlier than next year on the potential implementation of a state-backed digital pound. The Bank of England and Britain’s finance ministry are continuing with the design phase after a public consultation that received 50,000 responses, with privacy concerns being a prominent issue. No final decision has been made to pursue a central bank digital currency (CBDC), and a decision on whether to proceed to the build phase is expected around the middle of the decade.

Prime Minister Rishi Sunak supported the idea when he was finance minister in 2021, but the digital pound would likely not be operational until near the end of the decade if approved. Proposals suggest that individuals could hold electronic pounds up to a limit of 10,000 to 20,000 pounds, without earning interest. Banks have advocated for a lower limit due to concerns over potential outflows from traditional bank accounts.

British lawmakers have not yet been convinced of the necessity for digital cash, and privacy issues are also a concern for other central banks, including the European Central Bank and the US Federal Reserve. The European Union’s progress on a digital euro has been hampered by similar concerns.

The UK government states that a digital pound would be private but not anonymous, allowing for the tracking of transactions suspected of involving money laundering or financing terrorism. However, it would not replace physical cash, ensuring continued access to an anonymous payment option. The government also plans to ensure privacy through legislation and further public consultations if the project advances. The digital currency would not be programmable to block specific transactions, addressing some privacy advocates’ concerns.

Apple faces ‘strong action’ if App Store changes fall short, EU’s Breton says

by
Apple faces ‘strong action’ if App Store changes fall short, EU’s Breton says

Apple faces strong action if its changes to the App Store do not meet incoming European Union regulations, according to the bloc’s industry chief. The company will soon allow software developers to distribute their apps to Apple devices via alternative stores in compliance with the EU’s Digital Markets Act. However, critics argue that the changes do not go far enough and may violate the DMA. EU industry chief Thierry Breton stated that if the proposed solutions are not satisfactory, strong action will be taken. Under Apple’s new regime, developers will still have to submit apps for review, but users will have more choice in web browsers and contactless payment apps. Developers who opt out of using Apple’s App Store or payment system will still have to pay a “core technology fee” of 50 euro cents per user account per year.

Apple faces ‘strong action’ if App Store changes fall short, EU’s Breton says

by
Apple faces ‘strong action’ if App Store changes fall short, EU’s Breton says

Apple is facing potential strong action from the European Union if its changes to the App Store do not meet the incoming regulations set by the Digital Markets Act (DMA). The company will soon allow software developers to distribute their apps through alternative stores and opt out of using Apple’s in-app payment system. However, critics argue that the changes are not sufficient and may violate the DMA. EU industry chief Thierry Breton stated that if the proposed solutions are not satisfactory, strong action will be taken. Under the new regime, developers will still have to submit apps to Apple for review, and users will be able to choose their default web browsers and contactless payment apps. However, developers will still be required to pay a “core technology fee” of 50 euro cents per user account per year.

Strong batch of US data, ECB gives little away

by
Strong batch of US data, ECB gives little away

The US economy is performing well, with GDP data for the fourth quarter exceeding expectations. The European Central Bank (ECB) has left interest rates on hold at 4% and has not provided clear guidance on when rates will start falling. The euro has drifted lower after the ECB press conference and US data, but it has not broken out of its recent trading range.