ACCORDING to Eurostat data released on 12th March, construction output in Cyprus has slowed, boosting estimates that the island’s economy will grow slower in 2008.
Specifically, construction output in the fourth quarter of 2007 grew by 3% compared to 9% in the third quarter of 2007, 7.5% in the second quarter of 2007 and 4.2% in the first quarter. The growth rate of the construction sector, which is 8.5% of the Cypriot GDP, is smaller than that of economy, which stood at 4.3% in the fourth quarter of 2007.
Eurostat’s figures confirm forecasts that the sector of constructions, which contributed heavily to the fast GDP growth in the past five years, will slow down. Besides, the Finance Ministry expects that GDP growth will decline to 4.6% in 2008, 4.2% in 2009 and 3.3% in 2010. However, the current figures show that slowdown might be larger and steeper than the Ministry’s forecasts.
The construction slowdown is connected with the deterioration of the conditions in the Cyprus property market, market experts support. “The Central Bank’s move to cut the lending ceiling for the purchase of a home has contributed to the negative climate”, they said.
The anticipated slowdown in constructions – especially in Paphos – is more than obvious in the latest CYSTAT data on building permits. The area of the licensed projects in Paphos recorded a drop of 10.1% in 2007.
The sudden slowdown in constructions will spark fresh talks for the state’s development expenditure, which will be re-evaluated according to Finance Minister, Charilaos Stavrakis.
