NICOSIA, July 2 (Xinhua) -- Central Bank of Cyprus (CBC) has revised up its estimate of the country's 2018 economic growth to 4.1 percent from the previously predicted 3.4 percent, the bank watchdog said in its June economic bulletin on Monday.
Gross Domestic Product (GDP) growth is also expected to be a healthy 3.9 percent in 2019, to be followed by a lesser expansion of 3.5 in 2020, the bank said.
The main factor driving the expansion is private consumption, CBC said.
"In 2018, private consumption is expected to increase 2.5 percent after growing 4.2 percent in 2017, reflecting the increase in disposable income resulting mainly from an increase in employment and to a lesser degree higher earnings," the central bank added.
In addition to positively impacting private consumption, the increase in wages is expected to positively affect savings of households, which during the crisis years resorted to their deposits to maintain the level of consumption, and also help repayment of non-performing loans, CBC said.
It added that the unemployment rate is expected to average this year at 9.1 percent, compared with 11 percent last year, and is expected to drop to 7.4 percent in 2019.
AILING BANK
Ironically, the good news for the Cypriot economy came at the start of a week which was described as crucial for the stability of the country's banking system.
A run on Cyprus Cooperative Bank (CCB) branches continued on Monday, with worried depositors rushing to cash their money on fears of an impending liquidation of the lender.
Bank sources said over 7 million euros was withdrawn on Monday.
The run started after opposition parties mustering a majority in the 56-seat legislative chamber said they would vote down a deal for the purchase of the ailing state-owned CCB by Hellenic Bank, a much smaller lender.
Cypriot president Nicos Anastasiades scrambled on Monday to secure the support of at least one opposition party, his former DIKO partner in the government, in a crucial vote on Friday.
The Council of Ministers is to meet urgently on Tuesday to incorporate DIKO amendments into bundle of bills making up the framework for the management of non-performing loans and at the same time the protection of the primary residence of weak loan owners.
The parliamentary finance committee also scheduled day-long meetings until Friday to process the bills in time to be voted upon along with the deal to sell CCB.
Government spokesman Prodromos Prodromou dismissed opposition suggestions that developments are drawing Cyprus into a new crisis as a result of an increase of the sovereign debt from below 100 peRcent to over 110 percent of GDP that would require a second bail-out in five years.
"This is out of the question. The deal for the sale of the Cyprus Cooperative Bank was prepared in association with the European Central Bank, which had in mind the increase of the public debt and put its stamp on the agreement," Prodromou said.
