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At the crossroads of Europe, Asia and Africa, Cyprus is situated
in the north-eastern corner of the Mediterranean sea, 75Km
south of Turkey, 90Km west of Syria and 380Km east of the
Greek island of Rhodes.
The third largest island in the Mediteranean after Sicily and
Sardinia.
35% of the island is occupied by Turkish troops while 3%
constitutes the territory of the British Sovereign Base Areas.
Overview
 Cyprus is a member of the European Union. From 1
January 2008, it entered the Eurozone and adopted the
euro.
 Despite of the world going through an unprecedented
economic crisis marked by high levels of inflation and
stagflation, the Cyprus economy remains extremely
satisfactory and is performing near the top of European
economies.
 In 2008 it was classified by the International Monetary
Fund amongst the 32 advanced economies of the world.
 However, World economic depression and the negative
fallout from the global financial crisis would have
affected the Cyprus economy a lot more, had Cyprus not
jointed the euro-area in time.

 The euro acts as a protection shield for the purchasing power of
the Cypriot citizens and generally for a healthy long-term
financial framework of the local economy.
 In one of his speeches, Mr Orphanides, the Governor of the
Central Bank of Cyprus pointed out that:
 “One must not override the fact that an open economy, such as
Cyprus has, could not remain totally unaffected by the negative
repercussions of the international crisis. One of the important
benefits Cyprus has experienced from joining the euro is the
protection of the economy from negative fluctuations in the
world economic environment and this has had tangible value, in
particular in the last few months of 2008,”
 In addition the euro introduced many modern changes
which aligned Cyprus with modern economic notions
and European reality.
Economic Overview
 Cyprus has an open, free-market, service-based
economy with some light manufacturing.
Internationally, Cyprus promotes its geographical
location as a "bridge" between West and East, along
with its educated Greek and English-speaking
population, moderate local costs, good airline
connections, and telecommunications.
 Throughout the post - Independence period (Cyprus
was an English Colony until 1960), Cyprus has had a
record of successful economic performance, reflected
in rapid growth, full employment conditions and
external and internal stability.
 Cyprus is classified amongst the high-income
countries, nowadays. It has a standard of living that is
even higher than some other European Union memberstates and the performance of the economy compares
favourably with that of most other E.U. countries.
 These achievements appear all the more striking,
bearing in mind the severe economic and social
dislocation created by the Turkish invasion of 1974 and
the continuing occupation of the northern part of the
island by Turkey.
 The Turkish invasion inflicted a serious blow to the
Cyprus economy and in particular to agriculture,
tourism, mining and quarrying:
 70% of the island’s rich producing resources were lost,
the tourist industry lost 65 % of its hotels and tourist
accommodation, the industrial sector lost 46%, and
mining and quarrying lost 56% of production.
 The loss of the Port of Famagusta, which handled 83%
of the general cargo, and the closure of the Nicosia
International Airport, in the buffer zone, were
additional blows.
 Despite the blows, the Cyprus economy, has managed to
be transformed into a modern economy, with dynamic
services, industrial sector and advanced physical and
social infrastructure.
 The success of Cyprus in the economic sphere is
attributed, inter alia, 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 entrepreneurship
and a highly educated labour force.
 In the past 20 years, the economy has shifted from
agriculture to light manufacturing and services.
 The predominant and continuously expanding share of
the services sectors at the cost of both the primary
(agriculture, mining and quarrying) and secondary
sectors (manufacturing and construction) reflects the
comparative advantages, which Cyprus enjoys in the
sectors of services.
 These advantages derive mainly from:
1. its strategic geographical location at the
crossroads of three continents;
2. the favourable business climate, which is
directly related to the prevalence of conditions
of macroeconomic stability and a generally
favourable tax regime. In relation to this, the
recent tax reform introduced a uniform
corporate tax rate of 10%;
3. the well-educated labour force (in conjunction
with the competitive, as compared to
international standards, level of remuneration);
4. the relatively satisfactory state of its
infrastructure in transport, energy and
telecommunications;
5. satisfactory living conditions for foreigners, as
well as
6. the close economic and political relations
Cyprus has developed with its neighbouring
countries.
 The hotels and restaurants sector’s share to GDP rose
throughout the 1980s, 1990s and 2000s. However, the
sector exhibits fluctuations, confirming its vulnerability
to exogenous and imponderable factors.
The sectors of financial services, business and real
estate and renting activities, educational and health
services, also exhibit an increasing trend in their share
to GDP. This development was the result of the
utilization of the comparative advantages of Cyprus as
far as the supply of high quality of services are
concerned, both in the domestic market and in the
external market, as well as the high income elasticity
which characterises these services.
The agricultural sector’s share to GDP has been
decreasing and is attributed to the relatively lowincome elasticity of demand for agricultural products,
the urbanization trend and the reallocation of
productive resources from agriculture to other more
profitable economic activities.
 The contribution of the manufacturing sector to GDP
also exhibited a falling trend since the early 1980s.
 The sector is characterised by chronic problems of
competitiveness, due, inter alia, to the small size of the
majority of manufacturing units, which negatively affects
their capacity to utilize advanced technology and modern
methods of management, production and marketing.
 The decreasing trend of the contribution of the
manufacturing sector to GDP is also attributed to the faster
increase of production costs, as compared to competitor
countries as well as the intensification of competition due to
the implementation of the Customs Union Agreement
between Cyprus and the EU and the trend towards
liberalization of world trade.
The construction sector’s share to GDP has also been falling ,
a development attributed to the satisfaction of the housing
needs of the vast majority of the population, the reduced
interest in the construction of new tourist accommodation
and the relative slackening of demand for secondary homes
in recent years.
 Another dynamic component of the sector, important to
Cyprus's future economic growth, is offshore enterprises.
Attracted by generous tax concessions, the island's strategic
location between Europe and the Middle East, and stable
political conditions, many foreign businesses established
themselves in the republic.
 Cyprus has the fourth-largest ship registry in the world,
with 2,758 ships. It is an open registry and includes
ships from more than 43 countries, including Greece,
Germany, and Russia.
 In conclusion, the continuing upward trend of the share
of the tertiary sector of services to GDP reflects the
comparative advantages of Cyprus in this sector and
denotes the important role of services in a
contemporary society.
Economy of Cyprus
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Currency Euro since 1 January 2008
Statistics (based on 2007)
GDP (PPP)
US$21.382 Billions
GDP growth
3.5% (3rd Trimester 2008)
GDP per capita $27,000
GDP by sector
agriculture 3.1%, industry 9.1%,services 77.8%
(2007)
 Inflation (CPI)
 Unemployment
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4.8% (2008)
3.9% (Dec 2008)
External Public finances
Public Debt 59.8%
Revenues €5.319 billion (3.113 Billion CYP)
Expenses €6.154 billion (3.602 Billion CYP)
Structure of Unemployment
 The change in the structure of production in favour of the
tertiary sectors implied a similar change in the structure of
employment.
 The contribution of the tertiary sectors to the total gainfully
employed population increased from 45,5% in 1980, to around
77%.
 In parallel, it is noted that as early as from the beginning of
the 1960s there was a decrease, in absolute terms, of
employment in the primary sectors, while a similar trend is
observed in the secondary sectors as from the beginning of
the 1990s, a development which implies that the additional
posts are exclusively created in the tertiary sectors of
services.
Another basic characteristic of the labour market is the
employment of large numbers of foreign workers, especially
in unskilled or low-skilled occupations. The total number of
legally employed foreign workers reached 80,000 . From a
sectoral perspective, the majority of the foreign workers in
Cyprus are employed as household help, others work in the
sector of hotels and restaurants, construction, agriculture,
manufacturing and trade.
Unemployment by gender
 Despite policy reforms made by the Cyprus
government to combat discrimination and
increase women’s labour market participation,
women in Cyprus still lag behind men in terms of
access to employment opportunities and career
advancement. They also continue to be
confronted with a substantial gender wage gap.
 The percentage of unemployed women has always
been higher than the corresponding figure for men
(from 4.6% in 2003 to 5.4% in 2004).
 A relatively high female unemployment rate also
exists amongst women aged 35–44 years,
revealing that women face particular difficulties
when trying to reenter the labour force after a
period of inactivity.
Cyprus Unemployment rate*
 Year
unemployment rate
% change
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2000
2001
2002
2003
2004
2005
2006
2007
2008
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* Source: International Monetary Fund - 2008 World Economic Outlook
3.4
3.1
3.3
4.1
4.7
5.3
4.55
3.925
3.925
-5.56 %
1.76%
10.00%
24.24%
14.63%
12.77 %
-14.15 %
-13.74%
0.00%
Cyprus Population Age
 According to data from the statistical Service of the Ministry of
Finance, the total population of Cyprus was 802,500 in 2002 of whom
80,1% (642,600) are considered to be members of the Christian
Greek Cypriot Community and speak Greek (Armenians, Maronites
and Latin churches account for 1%). Of the remainder 10,9% (87,400)
belong to the Moslem Turkish Cypriot Community and speak Turkish
and 10% are foreign workers. English is widely spoken in Cyprus.
 *0 – 14 years:19.5% (78.922 male / 75 .523 female)
 15–64 years:68.5% (275.223 male / 267.798 fem.)
 65 years and over:12% (41.592 male / 53.546 fem.)
 * data source: The Cyprus Republic Statistics Department
Birth rate
• 12.56 births / 1000 population
Investment Climate
 In February 1997, the government revised its policy on
foreign direct investment, permitting 100% foreign
ownership in certain cases. Regulations on foreign
portfolio investment in the Cyprus Stock Exchange also
have been liberalised.
 Additionally, Cyprus passed a modern banking law in
July 1997, incorporating all the provisions and
directives of the EU for the prudential supervision of
credit institutions.
 Cyprus has concluded treaties on double taxation with
26 countries and has removed exchange restrictions on
current international transactions.
 Stock of direct foreign investment - at home: $13.18
billion (2007 est.)
 Stock of direct foreign investment - abroad: $5.324
billion (2007 est.)
CONCLUSIONS
 The Finance Minister of Cyprus has predicted that the
country will see growth of 3.7 % for 2009 as well as see full
employment and lowered inflation. In a recent news
conference reviewing the government’s budget for 2009 and
the economic outlook for Cyprus, Finance Minister Charilaos
Stavrakis had a very positive outlook.
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 “The Cyprus economy remains extremely satisfactory and is
performing near the top of European economies with a
growth rate of nearly 4%”. The minister also indicated that
inflation should come in at 4.8% for all of 2008, despite being
over 5% earlier in the year. For 2009, inflation is expected to
decrease significantly to between 2.5 and 3%.
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 The Minister also noted that the 2009 budget has several
large projects, including three new desalinisation plants and
infrastructure projects designed to decrease traffic in and
around Nicosia.
 Furthermore, the last few months, negotiations about the
solution of the Cyprus Problem are being carried on. Should a
solution be found for Greek Cypriots and Turkish Cypriots
leaving together , the Cyprus Economy will need to face new
challenges and ways should be found to remain at least
satisfactory.