Economic Analysis

Cyprus Quarterly Economic Outlook – July 2018

and

Cyprus Quarterly Economic Outlook
Authors: G. Hardouvelis, I. Gkionis
Publication: July 2018, Year 3, Issue 2

Key Points

  • The domestic banking sector map is redrawn as Cyprus Cooperative Bank (CCB) is liquidated
    • CCB’s performing assets are absorbed by Hellenic Bank
    • CCB’s NPEs under a new state-owned entity
    • New shareholders in Hellenic Bank to strengthen its capital base
    • An “ESTIA” scheme to protect the most vulnerable borrowers
    • Insolvency & repossession legal frameworks revamped ahead of the forthcoming 2018 European-wide stress-tests
    • A potential system-wide bank-run and banking crisis was averted
  • The rating agencies ignore earlier market concerns for CCB and maintain a positive outlook:
    • FITCH upgrades the long-term sovereign rating of Cyprus by one notch from BB to BB+
    • DBRS upgrades the long-term sovereign rating of Cyprus by one notch from BB low to BB
  • Growth momentum continues into Q1-2018, with GDP growth performance remaining at a post-Lehman peak
  • Fiscal performance continues solid as total General Government surplus reaches +1.9% of GDP in the first five months of the year vs. +0.6% during the same period last year

Download Cyprus Quarterly Economic Outlook, Year 3, Issue 2