The Significance of Leadership Within the Construction Industry

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The Significance of Leadership Within the Construction Industry

By | December 2011
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12. CYPRUS
Subdued growth prospects while fiscal challenges persist
Economic activity stalled in 2011…

After a modest recovery in 2010, with GDP growth at 1.1%, economic activity expanded by 1.5% in the first half of 2011. However, despite an exceptionally good tourist season, growth prospects for the year as a whole have been badly affected by the accident in July that destroyed the Vassilikos electricity producing plant, accounting for half of total generating capacity. A worsening external environment and tightening financial and fiscal conditions compounded the damaging effect. As a result, annual economic growth is expected to grow only slightly, by 0.3%, this year. Domestic demand, traditionally the main driver of growth, is expected to continue to shrink in 2011 at a similar pace to the previous year. Tightening bank lending conditions coupled with a worsening labour market outlook and weakening confidence have been weighing on private consumption. Public consumption has also put a brake on growth. In addition, weak foreign demand for housing and a restructuring of corporate balance sheets have kept investment on a correction path for a third year in a row. Graph II.12.1: Cyprus - GDP growth and contributions 12 9 6 3 0 -3 -6 -9 01 02 03 04 05 06 07 08 09 10 11 12 13 Dom. demand, excl. inv. Net trade Inventories GDP (y-o-y%) pps. forecast

continued to grow solidly. In line with the contraction in domestic demand, import growth decelerated. The downward adjustment of the labour market continued in 2011, with the impact concentrated in labour-intensive sectors such as construction and trade. The unemployment rate remained on a rising trend, reaching an average of 7.3% in the first two quarters of the year, up from 6.2% in 2010. …and recovery is expected to resume only in 2013, with the labour market lagging behind

Economic activity is projected to stagnate in 2012 and to recover moderately only in 2013. During this period, domestic demand is set...

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