Cyprus faces “several years” of high deficits that may bring it under European Union scrutiny unless long-term structural measures are taken, said Athanasios Orphanides, the governor of the country’s central bank. The worst-case scenarios for the euro area’s second-smallest economy “have been confirmed” and the recession the country faces this year “is probably worse than forecasts suggest,” Orphanides said yesterday in Nicosia, according to an e-mailed statement from the central bank. The worsening economic situation in Cyprus comes as the economy of the euro area as a whole shows signs of improving, he said. “What particularly concerns me” in Cyprus is “the sharp deterioration of public finances.” The tourism industry in Cyprus, which started using the euro in 2008, has been hit by a fall in overseas visitors amid the global recession. Income from the country’s main industry, which accounts for about a quarter of its economy, fell 16.1 percent in the first nine months of 2009, the Cyprus Statistics Service said October 27. (Bloomberg)

Louis Plc, the largest tourism company in Cyprus and Greece, expects to considerably reduce losses in 2009 as higher income from cruises in the key summer third quarter offset a fall in income from hotels. Pretax profit from cruise ship operations in the three months to September 30 jumped to 21.1 million euros ($31.5 million) from a loss of 5.1 million euros in the same period of 2008, with more than triple net income for the quarter to 36.5 million euros. “Louis’s results for the whole of 2009 are expected to show a loss, but a considerable improvement compared with 2008 mainly due to the cruise sector,” the company said in a statement yesterday on the Cyprus Stock Exchange. The company operates 12 cruise ships out of Cyprus, Egypt, France, Greece, India and Italy. It posted a loss of 30.8 million euros in 2008. Pretax profit from the company’s 19 hotels in Cyprus and Greece in the third quarter fell to 15.5 million euros from 17.6 million euros. (Bloomberg)

The Former Yugoslav Republic of Macedonia ’s (FYROM) economy will contract this year, but resume growth next year, Petar Goshev, governor of the country’s central bank, said yesterday. He also said he would prefer FYROM to take a loan next year from the International Monetary Fund to going to international capital markets, and that such a loan could create the room for interest rate cuts. “Macedonia was hit by crisis, but fortunately less than many comparable countries... the economy will contract 1.5 percent this year,” Goshev told Reuters on the sidelines of the European Banking Congress. “Next year, we could have positive growth of 1 to 2 percent.” He cited the narrowing trade deficit and slow credit growth as signs of economic recovery. This summer, FYROM, one of Europe’s poorest countries, issued a four-year eurobond worth 175 million euros, equal to its expected budget gap for this year. (Reuters)

Greece’s biggest refiner, Hellenic Petroleum, on Thursday reported third-quarter net profit of 60 million euros ($89.26 million) after a loss in the same period last year, as the value of its oil inventories rose. (Reuters)