Economy
Cyprus has an open free-market, services-based economy, with some light manufacturing. The Government’s role is limited to regulation, planning and the provision of public utilities. During the last fifteen years, the economy of Cyprus has demonstrated spectacular growth and its currency has enjoyed relative stability. Cyprus’ accession as a full member of the European Union as of 1st May 2004 has been an important milestone in the recent economic development. The island is often aptly referred to as a European country in the Middle East. Per capita GNP is approximately Euro 14.000, one of the highest in the Mediterranean. The cost of living is substantially lower than in most countries offering a comparable standard and quality of life.
The economy is driven by thriving tourist and service sectors and an export-oriented industry. In terms of their contribution to GNP the most important sectors of the economy are: trade, restaurants and hotels; community, social and government services; finance, insurance and business services; and manufacturing. The performance of the economy has been such that it has combined high real growth with low inflation and low unemployment. Moreover, the economy is characterised by a low external debt service to exports ratio and a high international reserves to imports ratio. Of the Euro 3,5 billion annual gross foreign exchange earnings, 38 percent originate from tourism, 22 percent from the export of goods, 9 percent from transportation and more than 9 percent from international business and shipping companies. Over 75 percent of tourist arrivals originate from the European Union.
Cyprus' main exports are potatoes, citrus fruit, clothing, chemicals and toiletries, machinery and transport equipment, cigarettes, wood and metal products, cement and footwear. Manufactured goods and agricultural products account for 75 and 20 percent of domestic exports, respectively. With regard to imports, intermediate inputs and consumer goods are the most important categories, each contributing more than 32 percent of total imports. Cyprus' main trading partner is the European Union accounting for about 55 percent of imports and 40 percent of exports.
The legal tender is Euro, which replaced the Cyprus Pound as Cyprus’ national currency as of 1st January, 2008. Joining the Euro zone was a major accomplishment for the Cypriot economy, resulting in such benefits as a higher degree of price stability, lower interest rates, reduction of currency conversion costs and exchange rate risk, and increased competition through greater price transparency.
Moreover, Cyprus ranks as the sixth leading maritime nation in the world with a merchant fleet exceeding 26 million gross tonnage.
Cyprus’s competitive advantages derive from its strategic geographical location, the 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.
source: www.mof.gov.cy |