ECONOMY

In Brief

Russia takes Cyprus off list of favorable tax zones Russia removed Cyprus from a list of countries characterized as «offshore zones with favorable tax status,» according to an e-mailed statement yesterday from the Cypriot central bank. The removal of Cyprus from this list is a positive development and bolsters its reputation as an international financial center, the Central Bank of Cyprus said. The eastern Mediterranean island may boost investment flows from Russia to Cyprus, Sotiris Sotiriou, director general of Cyprus Investment Promotion Agency, said in a telephone interview yesterday. «Cyprus’s image as a transparent and credible financial center is strengthened, especially in Russia from where Cyprus receives a considerable investment,» he said. According to the Central Bank of Cyprus, inward investment in Cyprus was 2.7 billion euros ($3.3 billion) in 2008, while Russia’s share was 738.2 million. (Bloomberg) Retail sales jump on discounts, Easter business Greece’s retail sales jumped 10.1 percent by volume year-on-year in March after a 1.7 percent increase in February, data from the Greek statistics service showed yesterday. The statistics service attributed the rise partly to favorable base effects as retail sales had dropped sharply in the same period a year ago, as well as to spending for Easter. Analysts expected weaker consumer spending in the second half of the year. Retail sales by revenue increased 14.9 percent year-on-year in March after rising 4.5 percent in the previous month. «It is partly explained by the fact that we had quite low numbers last year in the retail sales index. The data also reflect some additional consumer spending related to Easter,» said statistics service official Adriana Dafni. Month-on-month, retail sales by volume fell 0.3 percent. «Retail sales rose by a better-than-expected pace in March, reflecting the positive impact of the extended discount season on demand and the fact that Easter fell earlier this year,» said Nikos Magginas, economist at National Bank. «The double-digit fall in retail sales in the first half of 2009 will likely contain declines in the coming months as domestic demand has already seen a significant correction. Still, the worsening of leading indicators points to weaker consumer spending in the second half of this year.» (Reuters) Mixed messages The ECB sent mixed messages on its switch of policy to buy government debt bonds yesterday, with the head of the bank defending the purchases and the German central bank chief criticizing them. European Central Bank President Jean-Claude Trichet defended the ECB’s bond buying scheme, telling a conference organized by the Austrian central bank in Vienna that it did not undermine the ECB’s policy or independence. «We are not printing money,» he declared. «This confirms and underpins our commitment to price stability,» he said. The ECB has come under fire for its unprecedented scheme of intervening in securities markets to buy government and private debt in a move aimed at halting speculative attacks in the eurozone and restoring stability to bond markets. However, in Mainz, western Germany, German central bank Governor Axel Weber, a key member of the ECB governing council, reiterated his criticism of the ECB program to buy sovereign bonds. (AFP) Borrowing slows Greek household borrowing weakened further in April, slowing to 2.5 percent growth from the same period a year ago, in an economy in recession for a second year, the country’s central bank said. The Bank of Greece said the pace of loan growth to households decelerated from 2.7 percent in March and 3.1 percent in December. The recession and the tighter credit conditions are eating into the borrowing that fueled consumption and economic expansion in Greece in previous years. Greek GDP contracted by 2 percent last year and is seen shrinking by as much as 4.0 percent in 2010 as austerity measures to shrink its budget deficit, including tax hikes and wage and pension cuts, take their toll. The Bank of Greece said household loan balances fell by 174 million euros ($213 million) to 119.45 billion euros in April. Mortgages grew 3.3 percent, slowing from a 3.5 percent annual increase in March, while consumer credit expansion decelerated to 0.6 percent in April from 1.0 percent in March. (Reuters)