June 2016


Cyprus Economy Update



This alert covers updates regarding tourist arrivals, the Cyprus property market, the number of companies registered, the deposits in the Cyprus banking system, the trade balance, the GDP growth, deflation, unemployment and NPLs.
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Costas Christoforou CPA, TEP
General Manager costas.christoforou@cpm.com.cy

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Tourism

On the basis of the results of the Passengers Survey, arrivals of tourists reached 225.575 in April 2016 compared to 201.495 in April 2015, recording an increase of 12,0%. An increase of 9,6% was recorded in tourist arrivals from the United Kingdom (from 83.361 in April 2015 to 91.391 in April 2016), 53,4% increase from Russia (from 25.149 to 38.591) and 46,6% increase from Israel (from 8.312 to 12.185 this year). On the other hand a decrease of 6,4% was recorded in tourist arrivals from Greece (16.685 in April 2016 compared to 17.825 in April 2015).

For the period January - April 2016 arrivals of tourists totalled 477.183 compared to 391.483 in the corresponding period of 2015, recording an increase of 21,9%.

On the basis of the results of the Passenger Survey, revenue from tourism reached €80,9 million in March 2016 compared to €65,0 million in the corresponding month of the previous year, recording an increase of 24,5%.

For the period January - March 2016 revenue from tourism is estimated at €147,6 million compared to €124,3 million in the corresponding period of 2015, recording an increase of 18,7%.
(Source: CYSTAT)
Deposits and loans

Deposits in the Cyprus banking system rose by €144,9 million in April, while loans fell by 86,7 million, continuing the deleveraging process for the fourth consecutive month.

According to figures released by the Central Bank of Cyprus, total deposits in April amounted to €45,9 billion in April, whereas total loans declined to €57,0 billion.

Deposits recorded a net increase of €144,9 million in April compared with a net reduction of €95,6 million in March. On an annual basis deposits rose by 2,4% in April compared with a 2,0% in March.

Deposits from Cyprus residents rose by 144,8 million while deposits by residents of other EU member-states rose by 54,4 million. Deposits of non EU member-states declined by €54,3 million. Total deposits held by Cyprus residents stood at 33,6 billion in April with residents of other EU member-states amounted to €2,86 billion. Deposits held by residents of non EU member states amounted to €9,39 billion.

Total loans in April recorded a net reduction of €86,7 million registering their four monthly decline.

In March net reduction stood at €613,1 million, in February €50,8 million and in January €3,05 billion.

Total loans in April amounted to €57,4 billion of which €46,87 billion were held by residents of Cyprus, €3,40 billion by EU residents and €7,15 billion by residents of non- EU member-states.

Loans held by residents of non EU member-states recorded the highest decline with 121,9 million followed by loans held by Cyprus residents which declined by €37,5 million. Loans held other EU member states rose by €72,7 million.
(Source: www.stockwatch.com.cy)
Cyprus Property Market

Property sales in the first five months of this year were up by a substantial 25% compared to the same period of 2015, according to data published by the Land Registry in relation to total property sale contracts submitted to it.

A significant increase in the actual transfer of properties during the same period is also recorded. According to the data, sales contracts submitted at the Land Registry across Cyprus in the first five months of 2016 reached 2.355 compared to 1.884 at the same period last year.

In May property sales were up by 17% with 474 sales contracts submitted in relation to 405 in May 2015. The number of property transfer cases which took place in May were 998 and regarded 1,123 blocks, with the total stated amount coming to €218.329.262 and the total accepted amount coming to €233.199.848.

In May 2015 the number of property transfer cases were 858 and regarded 920 blocks, with the total stated amount for the transfers coming to €163.799.456 and the total accepted amount coming to €172.172.909.

In the first five months of 2016 the number of property transfer cases were 4.605 and regarded 5.454 blocks, with the total stated amount for the transfers coming to €1.2 billion and the total accepted amount coming to €1.33 billion.

In the first five months of 2015 the number of property transfer cases were 3.379 and regarded 3.697 blocks, with the total stated amount for the transfers coming to €635.5 million and the total accepted amount to €679.79 million.
(Source: www.stockwatch.com.cy)
Building Permits

The Statistical Service announced that the number of building permits authorized by the municipal authorities and the district administration offices during March 2016 stood at 485. The total value of these permits reached €91,4 million and the total area 88,2 thousand square meters. These building permits provide for the construction of 306 dwelling units.

During the period January - March 2016, 1.279 building permits were issued compared to 1.265 in the corresponding period of the previous year. The total value of these permits decreased by 3,8% and the total area by 7,2%. Τhe number of dwelling units recorded a decrease of 2,7%.

Building permits constitute a leading indicator of future activity in the construction sector.
(Source: CYSTAT)
Increase in applications for the registration in new companies

Applications for registrations of new companies continued to rise for ninth consecutive month in May, according to data from the Department of the Registrar of Companies and Official Receiver.

The applications increased significantly by 23.6% and reached 1,072 compared to 867 in May 2015 and by 24.13% in the first five months of the current year, the Cyprus News Agency reports.

Compared to April the applications for the registration of new companies rose by 4.2% in the fifth month of 2016.

During the first five months of the year, the number of applications reached 5,350 compared to 4,310 in the same period last year, an increase of 24.13%.The figures also showed that a total of 204,012 companies were registered in Cyprus at the end of May.

The new registrations of companies in the first five months of 2016 were 5,227. Throughout 2015 11,270 companies registered in Cyprus.
(Source: www.goldnews.com.cy)
GDP Growth

Τhe GDP growth rate in real terms during the first quarter of 2016 is positive and estimated at +2.6% over the corresponding quarter of 2015. Based on seasonally and working day adjusted data, GDP growth rate in real terms is estimated at +2.7%.

The increase of the GDP growth rate is mainly attributed to the sectors: "Hotels and Restaurants", "Professional, Scientific and Technical Activities", "Retail and Wholesale Trade", "Manufacturing", "Construction" and "Transport".

Negative growth rates were recorded by the "Financial Service Activities" and the "Household Activities with Employed Persons".
(Source: CYSTAT)(Source: www.stockwatch.com.cy)
Retail Trade

The volume of retail trade recorded an increase according to new data released by Eurostat.

Figures show that in February, the volume of retail trade rose by 6.7% in Cyprus compared to the corresponding month of 2015. In January 2016 the increase reached 3.6%.

In the EU the increase stood at 3.2% in February against an annual increase of 3.1% in January. In the Eurozone the volume of retail trade showed an increase of 2.7% from 2.2% in January. The volume of retail trade rose the most in Romania (+19%) and Luxembourg (+18.2%) while Greece (-6.6%) recorded the biggest decline. Eurostat released data for March 2016 as well, which are not available for Cyprus.

In March 2016, the volume of retail trade rose by 2.4% in the EU and by 2.1% in the Eurozone.
(Source: www.stockwatch.com.cy)
Trade Balance

Cyprus had €3.630 billion worth of exports outside the EU in 2015 of which €329 million to the USA, €142 million to Switzerland, €31 million to China, €10 million to Japan, €1.346 billion to Russia, €38 million to Canada, €9 to India, €2 to Brazil and €4 to Hong Kong, according to Eurostat.

At the same time the total worth of imports stood at €2.271 billion, of which €143 million from the US, €46 million from Switzerland, € 63 million from China, €6 million from Japan, €340 million from Russia, €7 from Canada and €7 from Hong Kong, the Cyprus News Agency reports.

That constitutes a positive trade balance of €1.359 billion in total, overly positive with all major extra EU trading partners and negative only towards China by - €32 million.
(Source: www.goldnews.com.cy)
Deflation

Deflation in Cyprus in April declined to -2.5 per cent, having remained in negative territory for 34 months, according to figures released by Cyprus' Statistical Service.

Deflationary pressures began in April 2013, one month after Cyprus and its international creditors (the EU and the IMF) agreed on a 10 billion euro bailout to save the island's banking sector and to secure the government's financing needs.

According to Cystat, the Consumer Price Index for April 2016 increased by 0.16 units or 0.16 per cent to 98.05 units as compared to 97.89 in March 2016, mainly due to increases in the prices of petroleum products and of certain clothing and footwear.

A decrease has been recorded in the price of electricity, figures showed.
(Source: www.sigmalive.com)
Unemployment

Cyprus registered the largest decrease in unemployment rates in April 2016, from 15.7% to 11.6% compared with a year ago, according to Eurostat, the statistical office of the European Union. Still Cyprus has the 6gh largest rate in the EU, with 47.000 persons unemployed.
(Source: www.stockwatch.com.cy)
NPL Decrease

The Central Bank of Cyprus announced that the total non-performing loans recorded a decrease of €1.1 billion in March 2016. A similar decrease was observed in the facilities with amounts past due over 90 days.

According to the CBC, total facilities decreased by €1.6 billion during the same period, reaching €53.122 million, resulting in the decrease in the ratio of NPFs to total facilities being limited to 54bps, reaching 48.36%.

Overall, a decrease of €1.6 billion or 6%, is observed in the non-performing loans in the period 31 December 2014 to 31 March 2016.

According to the data collected by the CBC, during March 2016, there was a migration of restructured loans from the category of non-performing to performing facilities, totaling €215 million following the successful completion of the observance period.

The said amount increased compared to previous months (Feb. 2016: €106 million, Jan. 2016: €100 million).
(Source: www.stockwatch.com.cy)
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