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Investing in Cyprus - The Economy

“The Cyprus Economy is characterized by macroeconomics stability, combined with high real growth and low inflation”

Cyprus has a record of successful economic performance, reflected in rapid growth, full employment conditions, external and internal stability, almost throughout the post-independence period.

The underdeveloped economy, inherited from Colonial Rule in 1960, has been transformed into, not only a major tourist destination, but also into modern economy offering dynamic services with advanced physical and social infrastructure. Specifically, industrial, agricultural as well as banking and shipping sectors have been rapidly developed.

In terms of per capita income, estimated at CY Ł9.477 in 2004 (EUR 16,242)*. Cyprus is classified, by the World Bank, among the high income countries. The average annual rate of growth in the past five years was about 3,6%, while average inflation rate stood 2,9% and average unemployment rate at 3,4% over that period.

In addition, Cyprus was ranked 25th in the United Nations 2003 Index of Human Development. Considering other socio-economic indicators such as the excellent housing conditions, pollution free environment, and low crime rate, one may conclude that the quality of life, standard of living and economic performance, position Cyprus favorably among the rest European Union member-states.

The success of Cyprus in the economic sphere is attributed, among other factors, to the adoption of a market-oriented economic system, the pursuance of sound macroeconomic policies by the Government, as well as the existence of a dynamic and flexible entrepreneurial community and a highly educated labour force. Moreover, the economy has benefited from the close cooperation between the public sectors and the social partners.

The basic characteristics of the Cyprus economy are the dominant role of the private sector in production, the small size of the domestic market, the small size of most business units, as well as its open character. Cyprus’s major imports are raw materials, consumer and capital goods, transports equipment and fuel, while major exports are pharmaceutical products, clothing, cement, cigarettes, paper products, plastic products, potatoes, citrus fruit, wines and furniture.

The tertiary sector of services is considered as the backbone of the Cyprus economy (accounting for about 76,3% of GDP in 2004); reflecting the gradual evolution of the economy from an exporter of minerals (mainly copper and asbestos) and agricultural products (citrus) during 1960-73, an exporter of manufacturing products (mainly clothing) at the end of the 1970s, to an international business and service centre in the 1980s – today.

Currently, approximately 30 foreign banks have established presence and over 1200 International Business Corporations (IBCs) currently maintain fully-fledged offices in Cyprus. Moreover, Cyprus ranks as the sixth leading maritime nation in the world with a merchant fleet exceeding 26 million gross tonnage.

The services sector is comprised mainly of tourism, finance, insurance and business services, trade, restaurants and hotels, transport and communication, manufacturing services, real estate, education, and shipping.

Cyprus’s competitive advantages derive from its strategic geographical location, favorable business climate and fiscal regime, stable macroeconomic environment, the high educational level of the labour force, in conjunction with the comparatively low level of graduates’ remuneration, the excellent infrastructural facilities, the advanced telecommunications’ network and the widespread knowledge of English.

Finally, Cyprus’s economic prospects mark favorably in light of its recent accession to the European Union.

Main Social Economic Indicators (1985 - 2004)

GNP per capita at current prices (CYŁ)
Chart of GNP per capita at current prices

Inflation And Unemployment Trends
Chart of Inflation And Unemployment Trends

EURO And USD Echange Rates to CYŁ
Chart of EURO And USD Echange Rates to CYŁ

EURO Zone, European Union (EU25) And Cyprus
Chart of EURO Zone, European Union (EU25) And Cyprus