The decline in Cyprus’s economy slowed in the third quarter of the year as tourism gave the bailed-out island a brief respite and seasonal lift.
Preliminary data showed it contracted 0.8 percent for the July to September period from 1.8 percent in the second quarter – 5.7 percent on a yearly basis, compared to 5.8 percent.
International lenders expect Cyprus to experience a deep recession this year and next as an austerity program takes hold and unemployment scales to record highs, stunting demand.
Negative growth rates were recorded in construction and manufacturing as well as banking, trade, and transport, the statistics department said.
The third quarter coincides with the busiest time of year for tourism. On a yearly basis, arrivals were mildly down in July and August and up in September.
Cyprus entered an agreement with the International Monetary Fund, the EU and the ECB for 10 billion euros in bailout aid in March, conditional on the closure of a major bank and the seizure of large savings to recapitalize a second lender.
Capital controls have been in place ever since to prevent a run on deposits. Authorities expect most of the controls to be eased by early next year.
Lenders expect Cyprus’s 17 billion euro economy to contract 7.7 percent this year, and 4.8 percent in 2014. [Reuters]