After a chaotic month in which Cyprus was pushed to the brink of default and a possible exit from the euro zone, Cypriots knew things would get bad. But not this bad.
According to a bleak assessment released on Thursday by its European partners, Cyprus will fall into a downward spiral for at least the next two years, with the economy shrinking up to 12.5% during the period as the country reduces a banking sector that had ballooned to over five times its gross domestic product.
And because the economy will do worse than expected, Cyprus must soon raise €13 billion ($17 billion) — nearly twice the amount the government thought it would have to come up with just a month ago — to keep its debt and deficit from spinning out of control and to meet the terms of a €10 billion ($13.1 billion) bailout secured last month by newly elected president Nicos Anastasiades.
“In the short run, the economic outlook remains challenging,” the European Commission report said.
New York Times