Eurozone country Cyprus will not shake off a three-year recession in 2015, a European Commission spring forecast predicted on Tuesday.
Although the bailed-out island’s recession is running out of steam, the Commission said the green shoots of recovery would not appear this year.
Nicosia has previously stated there will be a marginal recovery in 2015.
The report said the ravaged economy would decline by 0.5 percent of GDP this year but finally grow 1.4 percent in 2016.
There was a 2.3 percent contraction last year, milder than the 5.4 percent in the bailout year of 2013.
And unemployment will remain stubbornly high this year at 16.2 percent, falling by one percent next year.
"Although available short-term indicators for economic activity in the beginning of 2015 suggest a slowly improving growth momentum, the economy is not expected to grow before 2016,” said the EU.
"Despite low oil prices, domestic demand is forecast to contribute negatively to growth, together with a modest negative contribution from net exports," it added.
Brussels warned that risks to the recovery remain "tilted to the downside" due to non-performing loans (NPL) at restructured banks.
Bad loans make up more than 50 percent of all loans.
"A failure to address high NPL ratios could lead to a more prolonged period of tight credit supply conditions, stalling the recovery of investment and weakening domestic demand."
It said the recession in Russia, a major trading partner, could also have larger negative effects on Cypriot exports than anticipated.
The troika of international lenders -- the European Commission, European Central Bank and International Monetary Fund -- bailed out Cyprus in March 2013 to prevent a banking collapse.
In return for the bailout, Cyprus agreed to a severe austerity programme, a haircut on deposits and a profound restructuring of its bloated financial sector and of the banks.
Fears of a bank run in March 2013 forced the government to close all the island's banks for nearly two weeks and impose draconian controls when they reopened.
The eurozone’s only capital controls have since been lifted.
A bailout review is back on track after a key piece of foreclosure legislation was approved by parliament in April with the troika now back on the island.
The government says it is committed to completing the bailout programme earlier than expected.