Cyprus economy

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Republic of Cyprus
National flag of Cyprus
World economic rank 111th (nominal) (2017)
currency Euro (EUR)
Trade
organizations 		EU , WTO , OECD
Key figures
Gross domestic
product (GDP) 		USD 21.3 billion (nominal) (2017)
USD 31.2 billion (PPP) (2017)
GDP per capita USD 24,976 (nominal) (2017)
USD 37,023 (PPP) (2017)
GDP by economic sector Agriculture: 2.1% (2009)
Industry: 18.6% (2009)
Services: 79.3% (2009)
growth   3.4% (2017)
inflation rate 0.8% (2017)
Employed approx. 392,700 (2009)
Activity rate approx. 49.3% (real)
Unemployment rate 11.8% (2017)
Foreign trade
export 1.6 billion € (2015)
Export goods Re-exports such as Japanese cars, agricultural products, pharmaceuticals
Export partner Greece : 18.4% (2008)
United Kingdom : 12.9% (2008)
Germany : 5.7% (2008)
import € 5.0 billion (2015)
Import goods Cars, machines, electr. Appliances, consumer goods
Import partner Greece : 15.1% (2008)
Italy : 8.7% (2008)
Great Britain : 8.3% (2008)
Foreign trade balance € −4.6 billion (2015)
public finances
Public debt 104.5% of GDP (2017)
Government revenue 39.9% of GDP (2017)
Government spending 38.1% of GDP (2017)
Budget balance +1.8% of GDP (2017)

This article describes the economy of the Republic of Cyprus .

For the internationally not recognized Turkish Republic of Northern Cyprus there are hardly any evaluable data available. Financial services and the tourism industry are important industries .

Economic history

Banknote for one Cyprus pound from 2001

Cyprus already had an important economy in ancient times. The main export product was copper . The Latin name cuprum is derived from aes cyprium " ore from the island of Cyprus", after the island's copper mines.

Government spending was drastically reduced from 1964 (10.8%) to 1965 (3.08%). This restrictive fiscal policy became necessary after the economy had contracted by more than 8% in 1964 and fiscal consolidation seemed inevitable. Relative investments increased from 1964 to 1974.

With the Turkish invasion of 1974, 37% of the territory of the Republic of Cyprus was occupied. Here, however, 70% of all economic activities were provided: Among them were 66% of all tourist facilities (90% of the hotels), 80% of all citrus trees, the island's commercial port in Famagusta , etc. The loss of the most important agricultural land and means of production forced a reorientation the economy. Shipping and financial services became new pillars, and tourism could slowly be expanded again.

From the mid-1970s, the government created the framework to make the Republic of Cyprus a tax haven . The fact that companies are only taxed minimally if their owners do not live in the Republic of Cyprus led to a strong growth in holding companies with foreign owners in the 1990s after the collapse of the Soviet Union . As of autumn 2012, corporate income tax was still a low ten percent.

In 1996 the stock exchange was founded in Nicosia; the late 1990s were marked by liberalization. By 2000, harmonization with the European Union (EU) had been achieved. From 1997 foreigners were allowed to own 100% of a Cypriot company.

With the EU enlargement in 2004 , the process of integration into the internal market came to an end.

Framework

The Republic of Cyprus is a liberal market economy . The Republic of Cyprus has been a member of the European Union since May 1st, 2004. The liberalization of the markets that began with EU accession will continue, for example in the telecommunications sector. The goal of an attractive financial center with a bridging function in the Middle East is derived from tax reforms of 2002 and 2003. The currency of the Republic of Cyprus was the Cypriot pound (CYP) until the end of 2007. On January 1st, 2008 the euro was introduced at the exchange rate 1 EUR = 0.585274 CYP; This made the Republic of Cyprus the 15th member country in the euro zone.

See also: Cyprus pound and Cyprus euro coins .

Economic sectors

Natural resources

In Cyprus there is copper and asbestos , in the mountains there are large deposits of marble and pyrite mines. There is also gypsum and salt deposits there. Clay is mined on the beaches . The copper deposits were so important that the metal got its name from this: The Latin name cuprum is derived from aes cyprium ("Cypriot ore").

Agriculture

Citrus fruits are widely grown in Cyprus. Orange and grapefruit groves dominate the area around Limassol and Morphou (since 1974 Güzelyurt in Turkish). There is also the production of vegetables.

The "land of the red earth" in the southeast is considered the vegetable garden of the Republic of Cyprus with potatoes , eggplants , tomatoes , cucumbers , onions and other species. Cypriot potatoes are among the top exports (mostly to Great Britain). This was only made possible by modern irrigation systems . In 1983 the first irrigation system for CYP 24 million was completed: the Paphos Project for 5000 hectares of land. There are significant vineyards and extensive banana plantations near Paphos . Figs and pomegranates grow in the northwest.

Commandaria is a small wine-growing region north of Limassol . There are also some larger olive plantations all over the island. In the northern part poultry and lambs are preferred.

With many crops (fruit, vegetables and grain), two harvests per year are possible due to the extremely mild climate. Almost every family of Greek Cypriots still has a small piece of land somewhere on the island that is grown for their own use. Foreign unskilled workers in agriculture come more and more often from the north - completely legally - unlike in the tourism industry (here it is primarily Polish seasonal workers).

The areas used for agriculture have, however, been getting smaller and smaller since joining the EU (especially in the tourist regions), as the British are increasingly buying land and houses for retirement, and some fallow land is being subsidized in the EU.

energy

In 2007, 96% of the energy consumption of the Republic of Cyprus was based on imported petroleum, only 2% was obtained from solar energy.

Nevertheless, the Republic of Cyprus is a world leader in the use of solar hot water systems. 92% of all households have solar hot water generation and 53% of all hotels are equipped with a large solar thermal system. The European Solar Industry Federation ( ESTIF ) estimated an installed capacity of 57 kW per 1000 people in the Republic of Cyprus in 2007.

In July 2011, the explosion of suspected improperly stored explosives at the Evangelos Florakis naval base, killing 13, also severely damaged the country's most important power station, the Vassiliko plant near the city of Mari , Limassol district , which had previously produced 60 percent of the electricity . Thereafter, attempts were made to cover the Republic of Cyprus' electricity needs through smaller power plants, rented emergency power generators, feed-in from private power plants and temporary electricity supplies from the Turkish Republic of Northern Cyprus . The total output after the accident was 920 MW, but had to be supplemented by a further 120 MW from mobile power generation units in Moni (35 MW) and Dhekelia (60 MW) in the summer months, which are high in energy demand . A further 35 MW of power could be generated from the controlled feed-in of smaller private power plants ( virtual power plant ) into the network.

Nevertheless, the Republic of Cyprus struggled with regular power outages until the summer of 2012. In autumn 2012, a unit at the Vassiliko power plant was due to go back into operation. All damage in Mari should be repaired by summer 2013. At the same time, some power plant units there are being converted to run on natural gas.

Services, industry

Most of the jobs are in tourism. In second place is industry, which is mainly based on natural resources. It is followed by the processing industries of food and beverages, cement and gypsum production, ship repair and renovation, the manufacture of textiles, chemicals and metal goods as well as products made of wood, paper, stone and clay.

In 2007 the service sector generated around 75% of GDP, industry around 21% and agriculture around 4%. In addition to tourism, financial and business services play a major role. In the last few years the importance of the service sector has increased and its share has now risen to 81%. Numerous companies around the world settle in the Republic of Cyprus due to the low tax rate (12.5%).

Economic situation

gross domestic product

GDP growth

The GDP at market prices in 2006 was around 14.7 billion euros. The growth rate of the GDP has fallen since 2000 from approx. 5.5% in real terms to 3.8% in 2005. This trend continued, albeit to a limited extent, in the years 2006 to 2007, in which the growth was around 3.7 % was. This was mainly due to the strong dependence of the Republic of Cyprus on the world economy and the associated uncertain economic situation, rising oil prices and increasing competition in the tourism industry. The per capita income in 2006 was around 18,336 euros / year, an increase of 6.4% compared to 2005.

In 2009 real GDP growth was negative and stood at –1.9%. Due to the decline in economic growth in previous years, it was expected that GDP in 2008 would only increase by 3.4% to 16.665 billion euros. For 2009 a GDP of 17.744 billion euros was forecast. In fact, the GDP only rose to 16.9 billion euros.

inflation

The average inflation rate in the Republic of Cyprus from August 2005 was below the reference value of 3% set by the EU. In March 2007 it had its lowest value of 2.0%. The unemployment rate has been 4.5% in recent years, with a record low of 3.8% in November 2007. The country has been able to consolidate its budget and reduce the general government deficit through its fiscal policy in recent years. According to the Cypriot Ministry of Finance, the budget deficit in 2006 was around 1.5% of GDP (in 2005 it was around 2.5%). The total public debt was 64% of GDP.

Reduction of the inflation rate from 1992 to 1998

The illustration shows the course of the inflation rate in the Republic of Cyprus from 1992 to 1998. This is the 7-year period in which the inflation rate was reduced by the most percentage points. Over the entire period, the disinflation shows a value of 4.17%. The values ​​determined are distributed as follows:

From 1992 to 1993 the inflation rate fell from 6.51 to 4.89%, which means a decrease in the inflation rate of 1.62 percentage points. In the following years it was reduced by a further 0.23% in 1993, 2.05% in 1994 and 0.11% in 1995. In 1996, the inflation rate was found to have increased by 0.81%. However, in 1997 it fell again by 0.97% and in 1998 it also fell by a further 1.2 percentage points to 2.34%. In 2006 it had dropped to 0.2%.

Overall, it can be said that the fight against inflation in the Republic of Cyprus was initially successful. The implementation had some problems due to a lack of credibility and a lack of announcement of the measures, as inflation rose again to 2.6% in 2010. However, the economy quickly recovered. Despite everything, the positive development of inflation was supported by the liberalization of trade, increasing competition on the domestic markets and a lack of wage pressure.

labour market

No major changes are expected in the labor market. It was forecast that the unemployment rate in 2008 will remain roughly constant at 3.9%. In 2010 the unemployment rate was 4.6%, in 2011 it was 7.7%.

Export and import

The Republic of Cyprus is a relatively weak export country. The reasons for this are the increasing demand for imports (e.g. foreign vehicles) and losses in the tourism industry. Furthermore, high taxes are levied on certain export goods (e.g. cars). The trade deficit in 2006 was EUR 4403.05 million.

The import volume in 2006 reached a value of around 5515.14 million euros. The leading import partners of the Republic of Cyprus are Greece (approx. 956.77 million euros), Italy (approx. 629.81 million euros), Great Britain (approx. 492.23 million euros) and Germany (approx. 488.64 million euros) . Euro). The most important import goods are automobiles, machines, industrial supplies as well as electrical devices and consumer goods.

The export volume of the Republic of Cyprus reached a value of around 1112.13 million euros in 2006. The Republic of Cyprus’s leading export partners are Great Britain, Greece and Germany. In 2006, Germany was third among the importers with a volume of around EUR 50.76 million. The exports mainly consist of re-exports (e.g. Japanese automobiles), agricultural products (e.g. wine, citrus fruits) and pharmaceuticals.

The main exports from the south of the country are citrus fruits, potatoes, pharmaceutical products, cement, clothing and cigarettes, and from the north citrus fruits, dairy products, potatoes and textiles.

In the south, consumer goods, petroleum products and lubricants, semi-finished goods, machines, transport equipment are imported, in the north vehicles, petroleum, cigarettes, food, minerals, chemical products and machines.

The Republic of Cyprus is a member of the International Cocoa Organization .

Unit labor costs

Unit labor costs of the Republic of Cyprus and its major trading partners from 1995 to 2008

The figure describes the unit labor costs of the Republic of Cyprus and its main trading partners from 1995 to 2008. These trading partners are Greece, Italy, Great Britain and Germany. Unit labor costs in the Republic of Cyprus have decreased in recent years and were below the unit labor costs of Greece, Italy and the UK at the end of 2007.

Companies

Seat of the electricity supplier Cyprus Electricity

The ten largest publicly traded companies in the Republic of Cyprus are:

Companies Branch
Hellenic Bank PCL Banks
Bank of Cyprus Banks
Marfin Popular Bank PCL Financial services
Demetra Investments Public Ltd. Financial services
Pandora Investments Public Ltd. Financial services
Cyprus Trading Corp. Public Ltd. Consumer goods
Cyprus Cement PCL Building materials
Louis Public Co. Ltd. Shipping company
SFS Group Public Co. Ltd. Stock exchange
Logicom Public Ltd. computer

The only stock exchange in the country is the Cyprus Stock Exchange in Nicosia . The "Dow Jones Cyprus Titans 10 Index" and the "Cyprus General Market Index" are used to evaluate the stock market.

Individual evidence

  1. ↑ a b c d IMF World Economic Outlook Database April 2010 ; Retrieved October 2, 2010
  2. ↑ Eurostat - Gross Value Added in Agriculture. Accessed October 2, 2010
  3. ↑ a b Eurostat - Gross Value Added Industry and Services Accessed on October 2, 2010
  4. ↑ Growth rate of real GDP volume: change from previous year (%). Eurostat, accessed March 20, 2013 .
  5. ↑ press release from eurostat (PDF, accessed on February 19, 2012)
  6. ↑ Eurostat - Employment. Accessed October 2, 2010
  7. ↑ [1] Retrieved December 24, 2012
  8. ↑ a b c Eurostat - foreign trade, by declaring country.Retrieved on October 2, 2010
  9. ↑ a b Cyprus. Foreign trade. Federal Foreign Office, March 1, 2011, accessed on March 23, 2011 .
  10. ↑ Federal Foreign Office - Cyprus Economy Retrieved October 2, 2010
  11. ↑ Federal Foreign Office - Economy of the Republic of Cyprus.Retrieved October 2, 2010
  12. ↑ Eurostat - Government debt. Accessed 2 October 2010
  13. ↑ Eurostat - Total government revenue. Accessed October 2, 2010
  14. ↑ Eurostat - General government expenditure. Accessed October 2, 2010
  15. ↑ Eurostat - Government deficit.Retrieved October 2, 2010
  16. ^ Alan J. Day in: The Middle East and North Africa 2003. p. 261.
  17. ^ A b c Alan J. Day in: The Middle East and North Africa 2003. p. 255.
  18. ↑ How the tax haven became a restructuring case . The world. October 29, 2012. Retrieved November 3, 2012.
  19. ↑ a b c d [2] , accessed May 10, 2008
  20. ↑ Cyprus Renewable Energy Sources Policy Review 2009, EREC ( Memento from June 26, 2011 in the Internet Archive ) (PDF; 359 kB)
  21. ↑ Explosions shake naval base in Cyprus ( Memento from March 14, 2013 in the Internet Archive ) Kleine Zeitung from July 11, 2011
  22. ^ Energy International: Temporary Power Plants in Cyprus
  23. ↑ Famagusta Gazette (July 17, 2012): Energy production in Cyprus sufficient to meet high demand
  24. ↑ a b c CIA Factbook 2008
  25. ↑ a b c d http://www.auwi-bayern.de/awp/inhalte/Anhaenge/Exportbericht-Züsten.pdf
  26. ↑ Facts on Cyprus as a service location
  27. ↑ a b c d e World Economic Outlook Database April 2008. In: imf.org. Retrieved May 1, 2008 .
  28. ↑ See http://europa.eu/legislation_summaries/economic_and_monetary_affairs/institutional_and_economic_framework/l25093_de.htm , accessed: May 20, 2008
  29. ↑ See http://europa.eu/legislation_summaries/enlargement/2004_and_2007_enlargement/cyprus/e01111_de.htm , accessed on May 1, 2008

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