9 C
New York
Wednesday, February 8, 2023

Fiscal Council: ‘public finances stable, no immediate risks’

The Cyprus Fiscal Council on Friday said that it expects increased pressures on the macro economy for 2023, with forecasts slightly more unfavourable than those of the Ministry of Finance, in its report for 2022, published on Friday.

The council did note, however, that the restraint of expenditure and the management of the public debt so far, has put Cyprus on a satisfactory footing, for the time being, assuming there will be no policy change.

Specifically, the council made note of the inherent resilience that the Cypriot economy continues to demonstrate, with real GDP growth, despite its relative stabilisation at a lower level, continuing to be positive.

Based on the council’s favourable scenario for 2023, it expects a GDP growth of 2.4 per cent, compared to the 3 per cent expected by the Ministry of Finance.

Moreover, the council noted that the Cypriot economy has, to a large extent, absorbed the challenges created by inflationary trends and disruption in supply chains.

However, the council explained that growth is forecast to slow down, mainly due to external factors, for the next 18 months, mainly in the construction and non-tradable services sectors, despite all the significant increases in economic activity, which managed to hold down employment in the first quarter of 2022.

The council also noted that inflation has reduced household disposable incomes but boosted spending, particularly in retail.

For 2023, according to the council, inflation is expected to be limited to 3.8 per cent, compared to the estimates of the Ministry of Finance, which are at 3 per cent.

“With the stabilisation of prices in key costs for the economy, including energy, a de-escalation of price increases is expected,” the council said.

However, contractionary monetary policy, with interest rate hikes, translates into increased costs and increased credit risk, which implies a reduction in aggregate domestic demand at a time when it is also expected to decrease.

“Public finances continue to radiate stability and in the scenario of the continuation of the current policy mix, no immediate risks are apparent in the near term,” the council stated.

“However, in the medium term, it will be necessary to reverse the trends in government spending, otherwise the only alternative will be to increase productivity so that the benefit of society and the economy corresponds to the costs they bear for the maintenance of the government machine,” it added.

Source link

Related Articles

AGGA-GAGA: spontaneous music at Cornaro Art Institute

AGGA-GAGA is an adventurous music-making electric guitar duo formed in March 2022 by performer-composers Alkis Nicolaides and Georgios Bizios that is performing at Cornaro...

PJ conducts searches related to urbanism in the Santarém Chamber – Current

The same source told Lusa that the searches are taking place in the Urbanism department, targeting municipal and unelected officials, and that they are...

Who is eligible for the cost of living payment? How many people will receive the money in spring 2023

The UK remains in the grip of a cost of living crisis that is putting significant strain on households.The Office for National Statistics (ONS)...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe

Latest Articles

AGGA-GAGA: spontaneous music at Cornaro Art Institute

AGGA-GAGA is an adventurous music-making electric guitar duo formed in March 2022 by performer-composers Alkis Nicolaides and Georgios Bizios that is performing at Cornaro...

PJ conducts searches related to urbanism in the Santarém Chamber – Current

The same source told Lusa that the searches are taking place in the Urbanism department, targeting municipal and unelected officials, and that they are...

Who is eligible for the cost of living payment? How many people will receive the money in spring 2023

The UK remains in the grip of a cost of living crisis that is putting significant strain on households.The Office for National Statistics (ONS)...

Celtics reportedly one of several teams with trade interest in Jae’Sean Tate

Celtics Tate, currently with the Rockets, could add to the Celtics' defensive presence and versatility. Jae'Sean Tate playing for the Rockets in 2021. AP Photo/Tony Dejak The...

Still very concerned about former Vitesse player Atsu after earthquake | Football

There is a lot of uncertainty about the situation of former Vitesse player Christian Atsu. The 31-year-old Ghanaian, who is under contract with...