Outlook for Cyprus - Deep Recession, Increased Unemployment

All social transfers and labor programs in Cyprus are apparently going to be reconsidered in a bid to alleviate social consequences of the economic crisis. Cyprus Minister of Labor and Social Insurance Harris Georgiades projected an "even deeper recession" and increase in unemployment while he said that "coordination and mobilization to tackle the state of emergency in the most efficient way under the circumstances."

The Cypriot economy is projected to shrink by 3.5% in 2013. However, a recent Eurogroup decision to impose losses on depositors of Bank of Cyprus, Cyprus largest lender, and for the winding down of the island's second bank, Cyprus Popular Bank, as a prerequisite for a 10 billion financial assistance package, is expected to dramatically shrink the island`s banking sector in what has been described as a shock to the economy.