ECONOMY

In Brief

Sentiment in Cyprus improves in September NICOSIA (Reuters) – Economic sentiment in Cyprus improved in September on better expectations of the business outlook from consumers and the services sector, a publicly funded survey showed yesterday. The economic sentiment indicator (ESI) rose to 68.6 points this month from 60.8 in August. Compared to a month ago, fewer businesses and retailers said they expected further deterioration, and consumer sentiment was better, the survey, prepared by the University of Cyprus and RAI Consultants, said. There has been a time lag in the financial crisis reaching Cyprus, which tipped into a recession in the second quarter of 2009, considerably later than its eurozone peers. Its gross domestic product contracted 0.4 percent on a quarterly basis in Q2 on poor tourism arrivals and a slump in construction. While the ESI in other European Union member states showed an improvement from March, a clear upward trend is not yet apparent in Cyprus’s case, the survey said. Joint action prevented bank crisis, says EU BRUSSELS (Reuters) – Joint action by international institutions and large European Union banks helped to avert a systemic bank crisis in Central and Eastern Europe and stabilize economies in that region, the European Commission said yesterday. A sharp economic slowdown in Central and Eastern Europe caused by the global recession raised concerns that in some countries deeply indebted households would be unable to repay loans, which would threaten banks there. Banks in many Eastern European countries are largely foreign-owned, so trouble at those subsidiaries could create a domino effect by hitting their Western European parents. «A combined effort of appropriate host government policies, massive international support and parent bank engagement has helped to stabilize the economies in the region,» a Commission statement said, adding the outlook for the area had improved. Lek slides Albania’s lek currency gained against the euro yesterday after nearing its all-time low on Thursday, with banks narrowing spreads they had previously widened to stop trading, the central bank said. Albania’s central bank and the government appealed for calm on Thursday after the lek currency fell to near an all-time low against the euro. Traders attributed the panic buying of euros to comments by Prime Minister Sali Berisha a week ago that Albania should adopt the euro to bolster its economy and scrap the lek. Marjan Gjermeni, head of monetary operations at the Bank of Albania, said yesterday he had seen newspapers reporting lek rates to the euro surpassing its 2003 historical low of 140.85, but said those figures did not reflect a real transaction. «A small transaction happened at the level of 138.4 [leks to the euro]. Right now it is at the level of 137.2 leks,» Gjermeni told Reuters over the phone. «Banks widened the spreads due to panic to stop trading.» «I see they narrowed the spreads that they had widened during the panic time, but [spreads are] not at the normal level, which shows there is still some panic on the market,» he added. (Reuters)