April 2018


Cyprus Economy Update



This alert covers updates regarding Cyprus' economy, the increase in tourist arrivals and revenue, property sales' contracts, company registrations, deposits and loans, interest rates, the statistics in house prices and construction, public debt figures, unemployment, inflation as well as foreign and retail trade.
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Costas Christoforou CPA, TEP
General Manager costas.christoforou@cpm.com.cy

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GDP Growth

The GDP growth rate in real terms during the first quarter of 2018 is positive and estimated at +4.0% over the corresponding quarter of 2017. Based on seasonally and working day adjusted data, GDP growth rate in real terms is estimated at +4.0%.

The increase of the GDP growth rate is mainly attributed to the sectors: "Hotels and Restaurants", "Retail and Wholesale Trade", "Construction", "Manufacturing", "Professional, scientific and technical activities" and "Administrative and support service activities" (Source: CYSTAT).
Tourism

Arrivals

On the basis of the results of the Passengers Survey, arrivals of tourists reached 450.495 in May 2018 compared to 418.732 in May 2017, recording an increase of 7,6%. May 2018 had the highest volume of tourist arrivals ever recorded in Cyprus during the specific month.

For the period of January – May 2018 arrivals of tourists totaled 1.134.076 compared to 990.756 in the corresponding period of 2017, recording an increase of 14,5% and outnumbering the total arrivals ever recorded in Cyprus during the first five months of the year.

Revenue

On the basis of the results of the Passenger Survey, revenue from tourism reached €110,0 million in March 2018 compared to €86,1 million in the corresponding month of the previous year, recording an increase of 27,8%.

For the period of January – March 2018 revenue from tourism is estimated at €201,1 mn compared to €168,1 mn in the corresponding period of 2017, recording an increase of 19,6%.

The expenditure per person for March 2018 reached €572,48 compared to €611,41 in the corresponding month of the previous year, recording a decrease of 6,4%. The expenditure per person/per day for March 2018 compared to March 2017 also recorded a decrease of 0,7%. A decrease of 5,7% was recorded in the average length of stay, from 8,8 days in March 2017 to 8,3 days in March 2018.

The expenditure per person for the period of January – March 2018 reached €544,36 compared to €588,50 in the corresponding period of the previous year, recording a decrease of 7,5%. The expenditure per person/per day for the period of January – March 2018 compared to the period of January – March 2017 also recorded a decrease of 6,4% (from €66,88 to €62,57) (Source: CYSTAT).
Loans and Deposits

Total deposits in May 2018 recorded a net increase of €201,2 million, compared with a net increase of €2,4 billion in April 2018. The annual growth rate reached 4,6%, compared with 4,5% in April 2018. The outstanding amount of deposits reached €50,9 billion in May 2018.

Total loans in May 2018 exhibited a net decrease of €66,8 million, compared with a net decrease of €100,0 million in April 2018. The annual growth rate stood at -1,8%, compared with -2,0% in April 2018. The outstanding amount of total loans reached €48,8 billion in May 2018 (Source: www.centralbank.cy).
Non- performing facilities

According to the latest statistics provided by the Central Bank of Cyprus, total facilities as of 28/2/2018 were 48.512 million. Total non-performing facilities were 21.992 million representing 45,3% of the total facilities. Total non-performing facilities have decreased by 1.420 million since the 31st of December 2017 (Source: www.centralbank.cy).
Building permits

The Statistical Service announces that the number of building permits authorized by the municipal authorities and the district administration offices during April 2018 stood at 469. The total value of these permits reached €106,6 million and the total area 101,5 thousand square metres. These building permits provide for the construction of 418 dwelling units.

During the period January – April 2018, 1.984 building permits were issued compared to 1.861 in the corresponding period of the previous year. The total value of these permits increased by 27,5% and the total area by 24,5%. Τhe number of dwelling units recorded an increase of 22,3%. Building permits constitute a leading indicator of future activity in the construction sector (Source: CYSTAT ).
Price Index of Construction Materials

The Price Index of Construction Materials for May 2018 reached 99,99 units (base year 2015=100,00), recording an increase of 0,10% compared to April 2018.

For the period January - May 2018, the index recorded an increase of 1,06% compared to the same period of 2017 (Source: CYSTAT).
Company registrations

According to statistics acquired from the Department of Registrar of Companies and Official Receiver, new company registrations in 2018 up until 31st of May 2018 reached 6.099. The total number of registered companies as of 31st of May 2018 reached 211.870 (Source: www.mcit.gov.cy).
Retail trade volume up

In Cyprus, retail trade volume decreased by -0.8% in April 2018 (latest available data) compared to March 2018, but increased by 5.8% compared to April 2017, according to estimates from Eurostat, the statistical office of the European Union.

In May 2018 compared with April 2018, the seasonally adjusted volume of retail trade did not change in the euro area (EA19) and increased by 0.3% in the EU28.

In April, the retail trade volume decreased by 0.1% in the euro area and increased by 0.3% in the EU28. In May 2018 compared with May 2017 the calendar adjusted retail sales index increased by 1.4% in the euro area and by 2.3% in the EU28 (Source: www.stockwatch.com.cy).
Unemployment

nemployment rates in Cyprus drop further to 8.4% in May 2018 (36000 individuals, 7.9% males and 8.9% females), down from 8.6% in April 2018 and 11.4% in May 2017, according to Eurostat, the statistical service of the EU.

Among the Member States, the lowest unemployment rates in May 2018 were recorded in the Czech Republic (2.3%) and Germany (3.4%). The highest unemployment rates were observed in Greece (20.1% in March 2018) and Spain (15.8%). Compared with a year ago, the unemployment rate fell in all Member States (Source: www.stockwatch.com.cy).
Fiscal surplus €386,9 million

The General Government recorded a fiscal surplus of €386,9 million (1,9% of GDP) in the first five months of the year, compared to a surplus of €115,9 million in the corresponding period of 2017 (0,6% of GDP), according to preliminary estimates of the Statistical Service of Cyprus.

Expenditure:

Cystat reported that total expenditure between January - May 2018 recorded an increase of €55,9 million (+2,1%) compared to the corresponding period of 2017 and reached €2.686,2 million (€2.630,3 million in 2017).

The compensation of employees (including imputed social contributions and pensions of civil servants) increased by €33,6 million (+3,8%) to reach €919,0 million (€885,4 million in 2017). Social benefits registered an increase of €39,9 million (+4,0%) to reach €1.040,6 million (as opposed to €1.000,7 million in 2017) and current transfers increased by €6,1 million to reach €198,4 million (€192,3 million in 2017). An increase was also recorded by capital transfers (€7,4 million) that reached €23,3 million (€15,9 million in 2017). Subsidies recorded a small increase of €1,4 million to reach €16,2 million.

The remaining expenditure categories decreased compared to the expenditure amounts of the first five months of 2017. Payable interest recorded a decrease of €15,4 million and was reduced to €157,4 million, while investments were decreased by €13,7 million recording an expenditure of €95,5 million. Excluding land annexations, that are included in investments, this decrease is reduced to €7,7 million. Finally, intermediate consumption was reduced by €3,4 million compared to the corresponding expenditure of last year (€235,8 million in 2018 from €239,2 million in 2017).

Revenue:

Total revenue increased by 11,9% or €326,9 million, to €3.073,1 million during the first five months of 2018 (€2.746,2 million in the corresponding months of 2017). All revenue categories, except from the category of property income, showed an increase during the period of January - May 2018.

Taxes on production and imports registered a 17,2% increase from 2017, that is an increase of €189,9 million (€1.296,5 million in 2018 against €1.106,6 million in 2017), of which net VAT revenue increased by 26,1%, which corresponds to €169,0 million, and reached a total of €817,2 million (in comparison to €648,2 million in 2017).

Social contributions collected during this period increased by 9,9% (or €67,9 million) and reached €756,5 million (as compared to €688,6 million in January-May 2017). Revenue from taxes on income and wealth increased by €58,1 million or 10,4% and reached €619,1 million during the first five months of 2018 in comparison to €561,0 million in 2017, while current transfers received increased by €14,0 million and reached €80,7 million. An important increase of €31,4 million was recorded in capital transfers received by the State during this period, that reached €55,6 million (€24,2 million during January-May 2017).

Revenue from the sale of goods and services increased slightly by €1,0 million and totalled €199,6 million. Finally, property income, the only category that saw a decrease, was reduced to €65,1 million during the period of January-May 2018 (€100,5 million in 2017) (Source: www.stockwatch.com.cy).
Industrial production up by 7.7% in April

Industrial production was up by 7.7% on an annual basis in April, while manufacturing production was up by 8.6%, data released by the Cyprus Statistical Service on Thursday show. According to the data the Index of Industrial Production for April 2018 reached 118.3 units (base 2015=100), recording an increase of 7.7% compared to April 2017.

For the period January – April 2018, the index was up by 4.7% compared to the same period last year. In manufacturing, the index for April 2018 reached 127.0 units, recording an increase of 8.6% compared to April 2017 (Source: www.stockwatch.com.cy).
Inflation

In June 2018, the Consumer Price Index increased by 0,53 units to 101,49 units compared to 100,96 units in May 2018. Compared to June 2017, the CPI is increased by 2,3% while for the period January - June 2018, the CPI is increased by 0,3% compared to the corresponding period of the previous year.

In the twelve-month period from July 2017 to June 2018, in comparison to the period from July 2016 to June 2017, the annual average rate of change of the CPI remained stable. The corresponding annual average rate of change of the CPI in the previous twelve month period was 0,3% (Source: CYSTAT).
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