In Brief
Cyprus economy holding up better than some Cyprus’s economy, the second-smallest in the eurozone, is withstanding the global economic downturn better than many other countries, European Central Bank council member Giorgos Provopoulos said. «We are pleased that the effects of the global crisis are not as marked in Cyprus as elsewhere,» Provopoulos, who is also governor of the Bank of Greece, told reporters yesterday in Nicosia after a meeting with Cypriot Finance Minister Charilaos Stavrakis. Cyprus currently forecasts its economy will grow 2 percent in 2009, taking into account a predicted 10 percent fall in the number of tourists to the eastern Mediterranean island. The European Union predicts growth in Cyprus’s gross domestic product will slow to 1.1 percent this year. «The health of the banking sector in both Cyprus and Greece is also in a very good state,» Provopoulos said. (Bloomberg) Turkey pinning hopes on IMF standby deal Turkey is hoping to conclude in May a new standby deal with the International Monetary Fund that could be worth up to $45 billion (34 billion euros), newspapers reported yesterday. The daily Referans newspaper quoted Economy Minister Mehmet Simsek as saying that the government had agreed with the IMF on basic principles and officials in Ankara were currently drawing up the technical framework of the deal. (AFP) Turkish rate cut Turkey’s central bank is expected to cut interest rates by 50 basis points to a new historic low at the monthly meeting of its monetary policy committee next week, a Reuters poll showed yesterday. In the survey of 19 banks and brokerages, 16 institutions expected a 50-basis point cut. Two expected a cut of 100 basis points and one forecast a 75-basis point reduction. The bank cut its key interest rates to a record low last month and said it may be necessary to keep an easing bias in monetary policy for a considerable time. It lowered the borrowing rate to 10.50 percent from 11.50 percent and the lending rate to 13.0 percent from 14.0. The bank has cut the key borrowing rate by 625 basis points since November as the economy suffers a sharp slowdown. Gross domestic product shrank 6.2 percent in the fourth quarter and the economy is expected to fall into recession this year. Forecasts for the borrowing rate at the end of the year ranged from 8.50 percent to 10.50 percent. (Reuters) Romanian inflation Romania’s annual inflation eased less than expected to 6.7 percent in March from February’s 6.9 percent, as a weak leu currency continued to exert upward price pressures. Data released yesterday by the National Statistics Board showed prices rose 0.5 percent on the month in March, with food costs rising 0.4 percent. Non-food items were up 0.7 percent, while services rose 0.3 percent. The global crisis has weakened the leu currency this year, probably hurting domestic demand, which was formerly a key driver of economic growth. The lower leu has put upward pressure on consumer prices by raising the cost of imports and of the price of many services that are denominated in euros. Romania has some of the highest interest rates in the European Union, but its economy is also heading for recession as the crisis hammers manufacturing. (Reuters)
