Cyprus economy to grow by 3.5% in 2008

The Cyprus economy is expected to grow between 3.5% to 3.7% in 2008, Charilaos Stavrakis, Minister of Finance, has said. “Under the current circumstances, the rate of economic growth is considered satisfactory, consistently above the EU27 average,” he added.

Speaking at an event organised by the Cyprus Branch of the Institute of Directors, Stavrakis noted that despite international economic challenges, the local economy is a robust economy with satisfactory growth rates, almost full employment, controlled inflation, low interest rates and healthy public finances.

However, Stavrakis admitted that “the rising oil and food prices will eventually affect the economy of Cyprus”.

The inflation rate, said Stavrakis, is expected to range between 4% and 4.5%, compared to 2.5% in 2007, and the unemployment rate for the current year is expected to remain at the same levels as in 2007, when it fell to 3.9% of the economically active population.
The Cypriot Minister also noted that public finances remain at a good level and the fiscal balance is expected to remain in surplus, around 0.5% of the Gross Domestic Product. In addition, public debt is projected to fall to 48% of the GDP in 2008.

Stavrakis pointed out that the decrease in the rate of growth in the construction and banking sectors leads to a smaller increase of the government revenue and puts incremental pressure on the fiscal balance.

“The number of foreign investments in Cyprus continues to grow significantly, according to the data of the Department of the Registrar of Companies and Official Receiver, with Russia becoming the most important economic partner of Cyprus,” Stavrakis noted and added: “Russia is a country with very good economic potential.”

Regarding inflation, Stavrakis stressed that its rising trend needs attention, because any price increase affects Cyprus to a greater extent than other competitive to Cyprus countries. “As a result, Cyprus becomes less competitive”, he added.

Source: Financial Mirror

Property Investors Unfazed By the Credit Crunch & Still Buying Property Abroad

Experienced investors aren’t fazed by the credit crunch and still intend to buy property, especially in foreign markets, the Jet-to-Let Magazine Annual Conference survey has revealed. 

The Jet-to-Let Magazine 2008 Annual Conference recently took place at The Hilton Metropole in London. The conference was attended by a wide range of experienced investors - some with experience dating back four decades – and delegates were surveyed about their property purchases and views on the current investment outlook. The results, which provide an up-to-date snapshot of investor sentiment, show that 77% of respondents felt the credit crunch has not impacted on their desire to invest in property.

Eighty-five per cent of people viewed overseas jet-to-let properties as currently offering better opportunities than the UK housing market and are planning to invest in 17 different countries in the coming year, including Cyprus (39.7%), Morocco (19.4%), France (13.3%), Germany (5.1%) and Italy (4%).

They already had investments in 27 different countries outside of the UK, including Cyprus, France, Dubai, Brazil, Turkey and Spain. The combined property holdings of the investors totalled many hundreds of millions of pounds.

Despite the bleak picture portrayed recently by the media about UK property, 92% of attendees said they already have investments in the UK and 54% said they’re planning on investing this year. In addition, 72% have confidence in the UK property market bearing fruits over the next five years, whilst this rises to 89% over the next 10 years.

“The results clearly show that educated investors understand the long-term nature of property investment,” commented Dominic Farrell, editor of Jet-to-Let magazine and author of the bestselling property investment book, The Jet to Let Bible. “They realise there are currently better opportunities overseas, but still have medium to long-term confidence in UK property.”

Where reasons for investing are concerned, 98% cited property as being a sound long-term pension plan. Foreign currency mortgages were favoured by 98% of people and 78% said they used a specialist foreign currency broker.

Finally, when asked what the best form of long-term investment was, and with a choice of cash, stocks or property, an overwhelming 100% of people declared it to be property.

Notes for Editors

Jet-to-Let magazine is a free quarterly subscription publication aimed at investors and homebuyers seeking superior returns in domestic and overseas property markets. It’s currently delivered to subscribers located in 61 countries worldwide.

Jet-to-Let magazine is edited by Dominic Farrell, author of the bestselling property investment book, The Jet to Let Bible. The groundbreaking magazine is a must-have source of quality investment advice for both novice and experienced investors alike and brings together the views of respected professional investors, developers, financiers and journalists. For more details, or to set up a free subscription, see www.jet-to-let-magazine.com

For more details or interview requests with Dominic Farrell, contact:   0151 482 5543

Cyprus targets 0.1-0.6% budget surplus

Cypriot Finance Minister Charilaos Stavrakis remains adamant that despite the decline in tax revenue, the country will still manage to report a 0.1-0.6% of GDP budget surplus for 2008, or in numerical terms, a surplus of EUR 20 mln to EUR 100 mln.

Public debt meanwhile, is set to drop substantially to 48.5% of GDP in 20008 from 59.7% in 2007 and compared to the EU 27 average of 65.2%, with Stavrakis explaining to the Financial Mirror that the impressive improvement is due to the accounting treatment of sinking funds, as well as the fact that the country is running a budget surplus.

Stavrakis however is worried at the health of state finances, since on the one hand, tax revenue from capital gains taxes is sharply lower as a result of the decline in property prices and activity, while on the other hand, revenue from VAT is up 17%, indicating strong consumer driven activity.

“Consumer consumption cannot keep up at the current pace, which is why I expect that VAT receipts will go back to their ‘normal’ average increase of 7-8%, which is why we need to boost revenue from other sources,” said Stavrakis.

E-government

Stavrakis says one way to improve state finances is to make the economy more competitive, reduce civil servant hiring and place more emphasis on e-government, which improves the level of service, increases efficiency and at the same time is more cost effective.

“80% of state expenditure goes to civil servants pay, which is rising 7-8% annually due to COLA and pay agreements, while 13% goes on the development budget costing the government EUR 1 bln and 7% on operational expenses costing the state some EUR 0.5 bln annually,” says Stavrakis, adding that there is a lot of room for improvement

Source: Financial Mirror

Cyprus to host 2009 European small states’ games

Cyprus will play host to the 13th Games of Small States in Europe (GSSE) on 1-7 June 2009.

The file of the games was presented yesterday by Kikis Lazarides, President of the Cyprus Olympic Committee, in Monaco, where the 12th CSSE start today.

Eight European states participate in the Monaco games, namely Cyprus, Iceland, Luxembourg, Monaco, San Marino, Malta, Liechtenstein and Andorra. Montenegro will be added in the 2009 Games in Cyprus.

Lazarides will be the President of the Organising Committee of the Cyprus games.

Luxembourg will host the 2013 GSSE while Iceland will organise the 2015 GSSE.

Source: Financial Mirror  

Cyprus house prices up 9.1% year on year in May

Residential property prices in Cyprus continued to rise for a fifth consecutive month in May 2007, recording a monthly increase of 1.8%, according to the BuySell Home Price Index prepared by Dr. Stelios Platis and Marios Nerouppos of MFC S. Platis.

The index reached 124.58 in May, compared with 122.44 in April, marking an increase of 9.1% increase over May 2006.

The BuySell Home Price Index, which adjusts for factors such as increases in quality, is the only house price index produced for Cyprus.

According to Financial Mirror calculations, the BuySell Home Price Index has risen on average by 9.3% year on year so far this year, compared with 5.9% for the whole of 2006. House-price growth is therefore accelerating.

BuySell reported that the “Average Home Price” in Cyprus according to the BuySell index was CYP 97,064 (EUR 166,610) in May.

The BuySell Home Price Index was created and is updated monthly on behalf of BuySell Cyprus Real Estate by MFC S. Platis. The Index is announced during the second week of each month and depicts the movement of prices at which residential properties are sold in Cyprus, based on the extensive BuySell Cyprus Real Estate database.

Source: Financial Mirror

Swing-time in Cyprus

Virtually year-round sunshine and a stable economy have long made Cyprus a popular choice for those buying a first or second home in the Mediterranean. Recently cited as a bright spot in the international property market, it was described in the Euro Housing Review by the UK’s Royal Institution of Chartered Surveyors’ as “a rare case of a country shrugging off the gloom”.

Source: FT.com

Demand for expat investment services will grow

A representative sample of 1,321, surveyed by GfK Financial between 24th and 30th April 2007, were asked where they would most like to live in the world. Australia was voted the most popular overseas destination by Britons at 10%, while the most popular European destination was France at 6%.

Of those who would like to live in Australia, 59% were under the age of 45 with just 16% over the age of 65 years. In contrast, of those Britons who would like most like to live in France, 76% were over the age of 45 with just 3% under the age of 25 years.

In total, 42% of respondents had considered moving or buying a home abroad and 44% of these were below the age of 45. Almost two fifths (39%) were aged between 45 and 64 years of age.

The survey, commissioned by Bank of Scotland International, found that 4% of people surveyed already owned a home abroad and two fifths of these were under the age of 45 years (40%). One in five people (19%) with a home abroad were over the age of 65.

"It is the younger generation that continues to be attracted to moving abroad and Australia and France are clearly popular destinations,” said Tony Wilcox, managing director at Bank of Scotland International.

Opportunity for IFAs

Attracted to long term business from young buyers planning for their retirement, an increasing number of IFAs are providing overseas related property advice. IFA Promotions, a non-profit organization with 9,000 IFA members, offers consumers a dedicated expat investment service – with 294 individual advisers listing this in its top eight services (out of 23) and 355 listing overseas mortgages as one of their top seven products.

As a specialized area, however, IFAP chief executive David Elms believes that retirement planning requires a ‘whole of market’ service in terms of product and an understanding of the risk and reward elements of this kind of property investment. “Most IFAs would say, holistically, is this the right thing to be doing and is it part of the right balance of investments,” he explains. “IFAs have to be able to offer more than mere mortgage advice as this is about investment.”

Source: OPP

EU finance ministers back Cyprus’ accession to Eurozone

Eurogroup Finance Ministers decided unanimously in Luxembourg on Monday to suggest to ECOFIN the accession of Cyprus and Malta to the Eurozone as of January 1, 2008. Chairman of Eurogroup and Luxembourg’s Prime Minister Jean-Claude Juncker, told reporters after the meeting which preceded the ECOFIN session that ministers decided to propose Cyprus and Malta’s accession to the eurozone.

He said he had no doubt that European leaders will accept the suggestion for the two countries’ accession on 1st of January 2008, adding that Cyprus and Malta will be invited to take part in the Eurozone ministers’ meeting in September.

On his part, EU Commissioner for economic and monetary affairs Joaquin Almunia described the decision as “very easy” because, as he said, both countries fulfilled the criteria and had a positive suggestion by the European Commission and the European Central Bank.

The Eurogroup ministers’ decision will take an official form today at the Council of the European Union – Economic and Financial Affairs (ECOFIN) meeting which, in turn, will make a suggestion to the European Council meeting of June 21-22 to take the political decision. In July, ECOFIN’s Council of Ministers will ratify the accession of the two countries in the Eurozone, simultaneously locking Cyprus and Malta’s currency against the Euro.
 
Source: Financial Mirror 

Cyprus unemployment 4th lowest in EU

Cyprus has the fourth-lowest unemployment rate in the EU, according to Eurostat. Figures for April show the rate at 4.4% whereas in the Eurozone, average unemployment stood at 7.1%.

The lowest rate was in the Netherlands with 3.3%, followed by Denmark with 3.4%, Ireland 4% and Cyprus 4.4%.

The highest levels were recorded in Poland with 11.2%, Slovakia 10.5%, France 8.6% and Greece 8.6%.
In Cyprus, the unemployment rate for men in April 2007 was 3.7%, women 5.3% and persons under 25 years of age 9.1%.

Eurostat estimates that 16.7 million men and women in the EU27, of which 10.6 million were in the euro area, were unemployed in April 2007. In April 2006, 18.7 million men and women in the EU27, of which 11.8 million were in the euro area, were unemployed.

Source: Eurostat