Cyprus on Friday agreed a 52-million-euro injection to the flagging tourism and construction sectors as economic growth slowed to 3.5 percent in the third quarter from 3.9 percent in the second.

The official flash estimate of 3.5 percent gross domestic product growth for June-September from the year earlier quarter is the smallest increase for more than two years.

The slowdown is attributed to a slump in construction, real estate and hospitality services, the Cyprus statistical service said.

However, Cyprus -- which adopted the euro in January -- still has one of the highest rates of GDP growth in the eurozone.

The economy of the 15 nations sharing the euro has slumped into recession for the first time, EU data released on Friday revealed, with GDP falling 0.2 percent in both the second and third quarters compared with the previous three months.

The 27-nation EU as a whole avoided the same fate as its economy recorded zero growth in the second quarter, though it also suffered a 0.2 percent contraction in the third.

Two consecutive quarters of falling GDP is the normal definition of recession.

Although the authorities are confident Cyprus can weather a global recession, there is concern over the key construction and tourism industries that contribute a combined 30 percent to GDP and are major employers.

President Demetris Christofias on Friday announced a 52-million-euro action plan to help these two sectors that are starting to feel the pinch.

`Cyprus’s economy is in very good shape and I want to stress this and the prospects for 2009 are quite good despite a global recession,` Christofias told reporters.

`There is no reason to panic, no jobs are being lost -- we are doing this because construction and tourism might be negatively affected.`

He said the money would be made available to boost public construction projects and attract more tourists to the Mediterranean island.

Tourism receipts dipped 4.1 percent in the first nine months to 1.47 billion euros.

According to figures published in Phileleftheros newspaper, property sales are down 24 percent over the year and slumped 50 percent in October alone.

Projected economic growth for the whole of 2008 is around 3.7 percent, down from 4.4 percent in 2007.