CYPRUS remained stuck in recession in the first quarter, preliminary figures showed yesterday, with the economy shrinking 0.3 per cent, the same pace as in the last quarter of 2011.On a year on year basis, gross domestic product contracted by 1.5 per cent compared with a 0.8 per cent contraction at the end of 2011, the statistics department said in a flash estimate.It was the third quarter in a row that the economy had contracted. Economic output was hit last year by a munitions disaster which destroyed the largest power station, disrupting business activity.Construction and manufacturing shrank but there was some growth in banking and services, the statistics department said... 3 comments

IF THE CYPRUS economy could have been saved through publicity gimmicks, misinformation and propaganda we would have been boasting a budget surplus and an unprecedented growth rate by now. The communications game is after all the only thing AKEL and its government engage in with a degree of competence and know-how. Their technique may be crude, but it is their only method of deflecting attention away from the big responsibility they have for state of the economy... 6 comments

THE GOVERNMENT is in talks with the new Central Bank governor to launch an in-depth investigation into how the once robust Cypriot banking system has ended up in such dire straits, President Demetris Christofias said yesterday. Speaking at a conference of bank workers union ETYK in Nicosia, Christofias said the government was “greatly concerned” by the negative impact of the economic crisis on the banking sector. Noting that the government was already in contact with the CB governor, the president said: “There must be an in-depth investigation into how we got to this point. We must see transparently how we got here and what measures we will take collectively to tackle this unacceptable situation.” ... 9 comments

 IF THE CYPRUS economy could have been saved through publicity gimmicks, misinformation and propaganda we would have been boasting a budget surplus and an unprecedented growth rate by now. The communications game is after all the only thing AKEL and its government engage in with a degree of competence and know-how. Their technique may be crude, but it is their only method of deflecting attention away from the big responsibility they have for the state of the economy... Read on

THE unprecedented rise of the far right in Greece in last Sunday’s election has succeeded in raising enough alarm here in Cyprus to prompt President Christofias to comment that the economic crisis is strengthening radical parties across Europe.Fears of a rise in nationalism locally have been heightened by the potentially explosive mix of economic recession, rising unemployment and increasing racism, with local immigrant support groups saying that they fear foreigners will be on the receiving end of any nationalist surge. ... 15 comments

THE ELECTION result in Greece was another indication of why the country is in the mess it is in today. Nothing that happens there is an accident or without an explanation. With such voters and such politicians there was not a chance the country could have avoided its current, tragic predicament... 6 comments

THE EUROPEAN Commission’s (EC) Spring forecast for Cyprus yesterday painted a bleak picture of this year’s finances with real improvements expected only in 2013.The EC noted a near 1.0 per cent diversion from the government’s commitment to the EU to keep the deficit at 2.5 per cent of GDP by the end of 2012, forecasting a 3.4 per cent deficit compared to last year’s 6.3 per cent.“Driven by the recent consolidation efforts, the government deficit is set to narrow to 3.4 per cent of GDP in 2012 and 2.5 per cent of the GDP in 2013,” said the Commission. The EC also expects the GDP to shrink by 0.8 per cent by the end of this year, while public debt will increase from 71.6 per cent in 2011 to 76.5 per cent this year and 78.1 per cent in 2013... 7 comments

THE Cost of Living Allowance (CoLA) is to be discussed next week at a meeting between the finance ministry and the unions, Minister Vassos Shiarly said yesterday.Speaking on the sidelines of a conference in Limassol, Shiarly was asked about the new package of measures the government was mulling to contain the fiscal deficit below 2.5 per cent.The suspension of CoLA, the index-linked six-monthly allowance added to salaries has been mooted but no concrete discussions have been held on the issue so far. Shiarly said there was nothing to announce on the new set of austerity measures as yet. He made it clear the measures should first be discussed with the trade unions and other social partners and then made public... 3 comments

 HEIGHTENED RISKS of a Greek debt default and exit from the euro in the wake of Sunday's general elections there could spell more trouble for the economy of Cyprus, whose banks are heavily exposed to Greek debt.Among the Cypriot banks, the Popular Bank is the most exposed to Greek sovereign debt and the subsequent write-down in its value. According to conservative estimates, it may need some €1.5 billion to recapitalise.Bank stocks took heavy hits on the Cyprus Stock Exchange yesterday on news of the outcome of the elections in Greece. Popular Bank shares plummeted by 15.79 per cent, Bank of Cyprus' dropped by 12.64 per cent, and Hellenic's by 5.68 per cent... 18 comments

FORMER Central Bank governor Athanasios Orphanides has let fly at the AKEL administration, accusing both it and "its flunkeys" of engineering a smear campaign against him.Orphanides, whose term expired on May 2, officially stepped down yesterday. Though eligible for a new term, the President decided to have him replaced - prompting a verbal tit-for-tat that has gone on for days.Speaking to newsmen after the handover ceremony at the Central Bank yesterday, the usually soft-spoken Orphanides hit back at allegations from the government camp that he was to blame for the sorry state of the economy through his alleged mismanagement of the banking sector... 7 comments