Consumer prices fall sharply year-on-year in April


Consumer prices fell 1.5% from the previous month in April, following March’s 0.1% month-on-month uptick. According to the Statistical Service of Cyprus (CYSTAT), the drop mainly reflected a sharp decline in prices for transport, and housing and utilities.

Consumer prices dipped 1.2% on an annual basis in April, after inflation had come in at 0.7% in March—marking the lowest reading in nearly four years. Meanwhile, annual average inflation ticked down to 0.0% from 0.1% in the prior month. Lastly, harmonized inflation fell to 0.1% in March (February: 1.0%), which is the latest month for which data is available.

FocusEconomics panelists project harmonized inflation to average 0.0% in 2020 and 0.6% in 2021


GDP growth eases to five-year low in Q1

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Activity softened markedly in the first quarter as Covid-19 started to bite, with GDP expanding 0.9% on an annual basis in the first quarter (Q4 2019: +3.4% year-on-year)—the worst reading since Q1 2015. According to the preliminary release by the Statistical Service of Cyprus (CYSTAT), the slowdown chiefly reflected the impact of the preventive measures implemented to contain the spread of the pandemic, which suspended non-essential activities. The hospitality, manufacturing, leisure and construction industries were the hardest hit.

On a quarterly basis, the economy contracted 1.3% in Q1, following Q4 2019’s 1.0% expansion. Q1’s reading marked the worst downturn since Q2 2013.

More detailed national accounts data will be released on 29 May.

FocusEconomics panelists project GDP to increase 7.4% in 2020, which is down 4.1 percentage points from last month’s forecast, and rebound by 6.0% in 2021.


Industrial production falls at sharpest rate in over six years in March

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Industrial output plummeted 12.7% year-on-year in March (February: +3.8% yoy), marking the steepest drop since November 2013. March’s plunge was primarily driven by heavy drops in manufacturing and water supply production.

Meanwhile, the trend pointed down, with the annual average growth of industrial production coming in at 1.1% in March, down from February’s 2.2%.

FocusEconomics Consensus Forecast participants see fixed investment plunging 12.5% in 2020, which is up 3.8 percentage points from last month’s estimate, and growing 10.5% in 2021.


Economy loses notable steam in the first quarter

GDP growth eased to 0.9% year-on-year in the first quarter from 3.4% in the fourth quarter on partial Covid-19 effects. Q1’s print marked the worst reading since Q1 2015.

Household spending growth eased to 1.8% in Q1, marking the weakest expansion since Q2 2015 (Q4 2019: +2.2% yoy). Public spending accelerated, increasing 16.8% in Q1 (Q4 2019: +3.4% yoy). Meanwhile, fixed investment soared 31.4% in Q1, rebounding strongly from the 33.0% contraction logged in the previous quarter.

Exports of goods and services contracted 9.5% in Q1, marking the worst result in three years (Q4 2019: +4.8% yoy). On the other hand, imports of goods and services climbed 0.3% in Q1 (Q4 2019: -7.8% yoy).

On a seasonally- and working-day-adjusted quarter-on-quarter basis, the economy contracted 1.3% in Q1, contrasting Q4 2019’s 1.0% expansion. Q1’s downturn marked the worst reading since Q2 2013.

FocusEconomics panelists see GDP shrinking 7.0% in 2020, which is up 0.4 percentage points from last month’s forecast. In 2021, GDP growth is seen at 5.9%.


Consumer prices fall again year-on-year in May

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Consumer prices fell 0.1% from the previous month in May, following April’s 1.5% drop. May’s dip was mainly driven by lower prices for housing and utilities, and transport.

Consumer prices declined 1.5% on an annual basis in May, after they had dropped 1.2% in April—marking the lowest reading since June 2016. Meanwhile, the annual average variation in consumer prices dropped 0.2% in May, compared to the flat reading in April. Lastly, harmonized consumer prices tumbled 1.2% year-on-year in April (March: 0.1%), which is the latest month for which data is available.

FocusEconomics panelists project harmonized inflation to average 0.1% in 2020 and 0.5% in 2021.


Industrial output shrinks at the turn of 2020

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Industrial production slid 1.4% year-on-year in January, contrasting December’s 2.6% expansion and marking the first fall since June 2019. January’s downturn was primarily driven by sharper contractions of the water and electricity supply sectors, and a moderation in manufacturing output compared to the previous month.

Meanwhile, the annual average growth in industrial production dipped to 2.6% from December’s 3.3%.

FocusEconomics Consensus Forecast participants see fixed investment plunging 8.7% in 2020, which is down 17.6 percentage points from last month’s estimate, and growing 7.1% in 2021.


Uzbekistan increases Iranian cement imports to the exclusion of other countries

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Uzbekistan imported 3.27Mt of cement in 2019, down by 6.8% year-on-year from 3.51Mt in 2018. The value of cement imported fell by 13% to US$154m from US$176m. Trend newspaper has reported that cement imports from Kazakhstan fell by 32% to 0.97Mt from 1.43Mt. Imports from Tajikistan and Turkmenistan also fell, but rose by 85% from Iran, to 0.59Mt from 0.32Mt.

Uzbekistan, which has a 12.9Mt/yr installed cement production capacity, removed its zero rate of customs duty on cement in October 2019 in order to help align domestic demand with production.

Import duties to continue in Armenia

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The Armenian government has announced that it plans to extend the duration of state duties on cement imported from Iran and several other countries until 1 July 2020. The decision was made on the basis of analysis that confirmed an extension of the customs duties was appropriate. The government said that it would continue to monitor the situation.

According to the RA Statistical Committee Armenia produced 0.59Mt of cement in 2019, 8.1% more than in 2018. The RA Customs Service reported that the country imported 0.31Mt in 2019, a year-on-year increase of 70.5%.

Armenia resumes cement production

The government has included cement production under a list of permitted economic activities able to resume from 16 April 2020. Azbarez News has reported that the present lockdown is scheduled to continue until 15 May 2020. Cement and clinker imports from neighbouring Iran, historically the main source of construction cement for Armenia, have continued throughout the coronavirus crisis.

Lebanon’s Parliament endorses $300m aid package

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Lebanon’s Parliament on Thursday ratified a 1.2 trillion Lebanese pound ($300m) aid package for low-income families and vital sectors including agriculture and industry, as the government attempts to stave off an economic collapse exacerbated by the coronavirus pandemic.

The spending package aims to create a social safety net to support struggling families through the end of the year, and provide aid to businesses hit by the worst economic and financial crisis in the country’s history.

“It’s very difficult to cover all the needs; as you know, the state has no money,” Deputy Prime Minister and Defense Minister Zeina Akar – the architect of the package – told Al Jazeera. “We’re using money that isn’t there, securing it through loans. But we think we must help. We can’t not help.”

The 1.2 trillion Lebanese pound price tag equates to $300 million at the prevailing black-market exchange rate of 4,000 to $1 – or around $375 million at a legal, but mostly ignored, parallel rate of 3,200 to $1.

Lebanon’s currency has depreciated by some 60 percent since last summer due to an acute dollar shortage rooted in unsustainable government spending, ballooning debt, a decade-long economic slowdown and decreasing remittances from abroad.

Half of the new aid package will go towards providing 200,000 families with a monthly cash payment of 400,000 pounds ($100) through December. People with disabilities, victims of landmines and explosions, and parents of public school children in need will be prioritised, Akar said.

Some seven thousand small and medium-sized enterprises will receive a one-off cash payment of between 15 million and 20 million Lebanese pounds ($3,750-$5,000 at the black market exchange rate), while more than 30,000 farmers and 6,600 vocational workers will get 4.5 million pounds each ($1,125), Akar said.

And some 200 industries will get $1m in foreign currency to help them purchase imported raw materials. This industry bailout is necessary because informal capital controls imposed by banks have decimated all imports except essentials – wheat, fuel and medicine.

‘Torpedoed’ banking secrecy
Parliament also endorsed a law amending the country’s strict banking secrecy law. While the amendment originally gave judges the authority to probe the accounts of top officials, including ministers and members of parliament (MPs), a number of lawmakers raised concerns that the law could be used to target political foes of those in power, given Lebanon’s lack of judiciary independence.

“There is an intent to settle scores,” Progressive Socialist Party MP Wael Abou Faour said.

Lebanon regularly ranks among the most corrupt countries in the world.

Over the protests of many MPs, House Speaker Nabih Berri managed to push through a last-minute amendment to the banking secrecy law that exclusively empowers members of a yet-to-be-created national anti-corruption commission and investigative commission at the Central Bank to look into bank accounts.

“In a way, this law was frozen. They were supposed to allow judges to lift banking secrecy, but the formula has changed,” Nizar Saghieh, a leading Lebanese legal expert and co-founder of NGO The Legal Agenda, told Al Jazeera.

But Lebanese lawmakers also strengthened anti-corruption protections by endorsing a law that reins in the power of ministers to advance candidates for top government administrative and oversight chiefs. The country’s Civil Service Council will now select candidates through exams and interviews, leaving it up to the government to select from among three people who qualify.

Endorsing the law is a “radical, positive change towards liberating the administration from the dominance of the political authorities,” Independent MP Neemat Frem tweeted following the session.