Cyprus economy shrinks 2.4% in Q2

Cyprus's recession-hit eurozone economy contracted by 2.4 percent in the second quarter of 2012 compared to the same period last year, an official flash estimate showed on Tuesday. The dip marks the fifth successive quarter since Q1 2011 in which the island's troubled economy has failed to grow. According to the estimate, GDP growth rate in real terms, based on seasonally and working day adjusted data, shrank 0.8 percent in Q2 2012 compared to the previous quarter. There was a 0.4 percent contraction in the first three months of the year. The statistical service said construction, manufacturing, electricity, transport and trade all declined, while there was positive growth in the key sectors of banking and tourism.The finance ministry has predicted that the Cyprus economy will contract 0.5 percent in 2012 but this was before the government applied for an EU bailout in June. According to the Cyprus central bank the economy will shrink 1.1 percent in 2012 while economists at the University of Cyprus estimate a 1.5 percent slide this year. Cyprus is still in negotiation with the European Commission and the International Monetary Fund over the amount needed to prop up its Greek-exposed banking sector and economy. It is estimated that the island's 17 billion euro economy may need in excess of 15 billion euros in EU funds to keep afloat.