ECONOMY

In Brief

Three-quarters of investors see Greek bankruptcy Global investors have little confidence in Europe’s efforts to contain its debt crisis or in European Central Bank President Jean-Claude Trichet, with 73 percent calling a default by Greece likely. Only 23 percent say they expect the region’s almost $1 trillion rescue package to both keep the European monetary union together and prevent a debt default by a government, according to a quarterly poll of investors and analysts who are Bloomberg subscribers. More than 40 percent say Greece is likely to abandon the euro. «There is clearly a risk of a breakup of the euro,» says Geoff Marson, managing director at a Guernsey subsidiary of London-based Odey Asset Management, which oversees about $6 billion. Trichet, whose ECB supported the rescue package by buying the bonds of Greece and other European governments, saw his approval rating tumble from a January Bloomberg poll. A plurality – 48 percent – give the 67-year-old central banker an unfavorable rating in the latest poll, while 41 percent view him favorably. In January, Trichet received a 60 percent approval rating, with 27 percent regarding him negatively. (Bloomberg) Cyprus showing signs of economic recovery NICOSIA (AFP) – The Cypriot economy is showing signs of recovery with first-quarter growth up for the first time since late 2008, official figures indicated yesterday. The struggling economy grew marginally by 0.1 percent of gross domestic product between January and March compared to the same period last year, the statistical service said. «The improvement observed in the economy… is mainly attributed to the positive growth rates that banking activities and the services sector continue to show,» it said. Tourism, industry and trade also had contributed to growth, it added. A flash estimate issued by the state statistical service in May had projected -0.2 percent growth for the first quarter. The last time the Cyprus economy registered positive growth was during the third quarter of 2008. Last year, the holiday island saw its tourist receipts fall 16.7 percent, with arrivals down 10.9 percent, while foreign property investments also slumped. Tourist arrivals for the first four months of 2010 were down 8.2 percent over last year. With tourism and construction contributing around 30 percent of GDP, the credit crunch and recession in Europe have had a major impact on the economy, which grew by 3.6 percent in 2008 and 4.4 percent in 2007. Bulgarian inquiry The European Commission will send a mission to investigate Bulgaria’s public finances after the European Union member changed its forecast of a balanced budget for this year to a deficit. The Commission isn’t in a position to assess Bulgaria’s 2010 budget without more insight and has «doubts about the methodology» of calculations, Commission spokesman Amadeu Altafaj told reporters in Brussels yesterday. European budget experts will soon go to Bulgaria to probe the accounts, he said. «The Commission lacks information on why Bulgaria has revised its planned 2010 budget from a balanced budget to a deficit,» Altafaj said. «The Commission is only belatedly being informed by Bulgarian authorities about sizable revisions in the budgetary outlook, which constitutes a violation of treaty obligations.» (Bloomberg) Market frozen Spanish lenders are being frozen out of the international interbank market because of growing risk aversion among financial institutions over the debt crisis in Europe, a newspaper reported yesterday. «No foreign institution will finance us on the interbank market,» a manager of an unnamed medium-sized Spanish bank, who was speaking on condition of anonymity, told the newspaper Cinco Dias. The manager of another bank said that «for several weeks, no one else will issue debt, even with the backing of the state.» He added, «Santander and BBVA, banks whose solvability are recognized, can not sell bonds.» As happened after the bankruptcy of Lehman Brothers in September 2008, banks have all but stopped lending to each other on the interbank market owing to the debt crisis in the 16-nation eurozone. Spain is under scrutiny from markets because its public deficit soared to 11.2 percent of gross domestic product in 2009, the third-highest level in the eurozone after Greece and Ireland. (AFP)