The European Commission on Friday slashed its economic outlook for cash-starved Cyprus, doubling its recession forecast for the tiny Mediterranean nation in desperate need of a financial bailout.
The island will see its 17.9-billion-euro economy contract by 3.5 percent this year, the Commission said in its winter economic forecast.
The previous autumn forecast released in November had output contracting by 1.7 percent in 2013.
“Risks remain important and tilted to the downside,” the Commission said.
Conclusion of an adjustment program would be of “paramount importance” in stabilizing Cyprus’s economy, it added.
The economy was expected to contract by a further 1.3 percent in 2014.