THE government yesterday earmarked €52 million to support tourism and construction, as GDP growth figures slowed to 3.5 per cent in the second quarter and the eurozone slid into recession.
Figures announced yesterday showed economic growth slowed year on year to 3.5 per cent from 3.9 per cent in the second quarter due to reduced activity in the construction, real estate, financial services and hospitality sectors, the Statistics Department said.
On top of that, the Finance Ministry’s Bulletin of Economic Review Bulletin for October-November 2008, published yesterday, warned that having reviewed recent developments abroad, the impact on the Cypriot economy was likely to be limited “but not negligible”, mainly due to the slowdown in construction and tourism.
Construction and tourism were the two sectors targeted by the government for assistance under the plan announced yesterday by President Demetris Christofias.
His meeting with the Ministers of Finance, Interior, Commerce, Labour, and Transport yesterday earmarked €40 million to support the construction sector while €12 million more was allocated to the Cyprus Tourism Organisation (CTO).
Announcing the measures after the meeting, Christofias pledged full implementation of the state’s development budget, more new large projects, and the strengthening of government housing projects.
He also pledged extra money to municipalities to ensure they too could carry out planned projects.
Christofias also promised to cut red tape by simplifying procedures to overcome “bureaucratic bottlenecks” that would help projects get off the ground more quickly.
For tourism, he said immediate measures would be taken to simplify visa procedures for third countries to attract tourism from destinations other than EU member states.
This would involve the creation of a number of consulates in countries of high tourist interest to Cyprus, he said.
Christofias also said the state would allocate another €12 million to the CTO budget to promote Cyprus abroad.
The tourism measures are not likely to satisfy the private sector to any great extent. Hoteliers and others had been seeking direct incentives such as reduced electricity costs and perhaps lower VAT.
But Christofias said the economy was very healthy and the outlook for 2009 was “quite good” despite the international crisis. “This is evidenced by key economic indicators. It is enough to mention the growth of the economy, which is the second highest of the euro zone,” he said. “Any panic about the country’s economy is not justified. Panic is injurious and destructive.”
Christofias said that despite the satisfactory outlook, the government would not be complacent.
“Globalisation creates interdependence and that is why the government decided today on a set of preventive measures for the sectors of construction and tourism.”
To co-ordinate the new measures in both sectors, the President has appointed two ministerial task forces.
