Economic Statistics for the Republic of Cyprus
These are the latest statistical figures on the Economy of the Republic of Cyprus.
STATISTICAL PROFILE OF CYPRUS
Population: approx. 778,700 (2007)
Area: 9,251 sq. km
GDP: US$22.54 billion
GDP growth: 5%
Per capital GDP: $ 29,810 (2007)
Exports, (gds & serv.) $ 5.1 billion
Major Exporting Partners:
Imports, (gds & serv.) $ 4.3 billion
Major Importing Partners:
Ranks 14th in the World
The Heritage Foundation and The Wall Street Journals annual Index of Economic Freedom for 2004, ranks Cyprus (not counting the occupied areas) as 14th in the world. Hong Kong was first, and the U.S. tied for 5th, among the 155 nations rated; Cyprus is also one of the five nations that accomplished the most improvement in 2000.
Based on some 50 economic variables, the ratings (1 for best, 5 for worst), gave Cyprus high marks in a number of areas, noting that the EU accession process has served as an impetus, for the pace of Cypruss increasing economic liberalization. The highlights:
- Trade Policy:
The survey notes a very low level of protectionism, in Cyprus, with tariffs down from 5.3 percent to 4 percent, and quotas and non-tariff barriers being reduced and gives it the rating of 2.
- Monetary Policy:
With, a very low level of inflation of just 2.09 percent, the survey gave Cyprus another top mark of 1.
- Property Rights:
With a very high level of protection, and independent judiciary, a fair legal system, and the right to due process, Cyprus gets another 1.
The report says that a low level of regulation, applied evenly in most cases, makes establishing a business relatively easy, in Cyprus and gives it the second best score of 2.
- Banking & Finance:
Cypruss banking system adheres to standards similar to those in the U.S. and Europe, the report says, and provides a full range of services, with solid international ratings. The report again sets its score at 2.
- Wages & Prices:
With a low level of intervention, and prices set by the market, Cyruss rating improved by one point to 2.
- Government Intervention:
The government plays a large role in the economy and in many firms, and consumes 19.3 percent of GDP; the survey scores it at 2.
- Capital Flows & Investment:
The survey says Cyprus, has focused on lowering barriers to foreign direct investment controls, and grants investment permits in a timely and non-discriminatory fashion, (3).
- Fiscal Burden:
While government expenditure still accounts for 37 percent of GDP, the average taxpayer in Cyprus pays only 20 percent in marginal taxes and the top corporate rate is 25 percent, for a 2.5 but stable rating.
- Black Market:
Modern copyright and patent laws passed in Cyprus, have now improved intellectual property-right protection, the report says, with moderate activity (3).
Synopsis of Economic Activities
Cyprus has a record of successful economic performance, reflected in rapid growth, full employment conditions and external and internal stability, almost throughout the post-Independence period. The underdeveloped economy, inherited from Colonial Rule in 1960, has been transformed into a modern economy, with dynamic services, industrial and agricultural sectors and advanced physical and social infrastructure.
In terms of per capita income, currently estimated at $ 15.000 (2000), Cyprus is classified among the high-income countries. These achievements appear all the more striking, bearing in mind the severe economic and social dislocation caused by the Turkish invasion of 1974 and the continuing occupation of the northern part of the Island by Turkey.
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 labor force.
- Combatting Financial Crime
Cyprus has implemented a comprehensive system to combat money laundering and other financial and drug-related crimes. The country's comprehensive legislative and institutional framework enables the government and law enforcement agencies to deter, prevent, and combat such crimes, as well as bring perpetrators to justice. As a regional financial hub and international business center, Cyprus also uses these tools to cooperate fully with American, European, and other international authorities.
- Money-Laundering and Other Financial Crime
Cyprus places the fight against money-laundering among its top domestic and foreign policy priorities. In 2000, it investigated more than one hundred separate cases.
The European Union (EU) confirms that, on monetary policies and financial activities related to the free movement of capital, Cyprus has undertaken required measures and met or exceeded the necessary standards for EU membership. Since 1996, Cyprus has implemented a full range of laws and regulations to meet the EUs exacting standards. (2001)
EU Negotiator Leonard Maurer finds that the government and other relevant authorities in Cyprus have undertaken everything in their power to avoid money-laundering activities, and their enforcement record shows that they are doing well. (2001)
The International Monetary Fund (IMF) verifies that Cyprus anti-money laundering meets IMF standards. (2001)
The G-7 is Financial Action Task Force on Money Laundering verifies that Cyprus has implemented a comprehensive anti-money-laundering system. (2000)
- Cooperation with the United States:
Cyprus and the United States are parties to a Mutual Legal Assistance Treaty for cooperation in addressing issues such as financial and drug-related crimes
Cyprus and the United States are members of the Egmont Group of 53 countries that have formed financial intelligence units and cooperate internationally on cases and issues related to financial crime.
The State Department's International Narcotics Control Strategy Report finds that cooperation between the United States and Cyprus in law enforcement efforts has been excellent.
- Other International Cooperation
Cyprus is a signatory to the United Nations (UN) Convention Against Illicit Traffic in Narcotic Drugs (Vienna Convention) and the Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime (Strasbourg Convention).
Cyprus is also a signatory to the UN conventions against Transnational Organized Crime and for the Suppression of the Financing of Terrorism. October 2001
Cyprus as an International Business and Financial Centre
Cyprus is the third largest island in the Mediterranean Sea, situated at the Crossroads of three continents and in the trading paths of the first merchants of antiquity. Cyprus' strategic location has been a major factor in shaping its history throughout the centuries and its development in recent years into a centre for international business.
Cyprus' economy is market oriented, with the private sector playing the dominant role in the production sphere. The government's role focuses on the creation of a favourable entrepreneurial climate, through the maintenance of conditions of macroeconomic stability, the development of the economic, social and legal infrastructure and the pursuance of social and environmental objectives.
The economy of Cyprus has exhibited dynamism and flexibility throughout the period since its independence. It is worth noting that according to the publication of the World Bank "The East Asian Miracle" Cyprus ranks as one of the top 12 performers worldwide in terms of its average annual growth rate of GDP per capita.
Some of the salient elements of this success are the following:
- An impressive real annual rate of growth of GDP.
- The rapid growth of GDP accompanied by the creation of a large number of employment opportunities and the consolidation of conditions of full employment.
- The satisfactory growth performance accompanied by conditions of relative internal and external economic stability.
- The rapid rate of growth was accompanied by a profound restructuring of the economy from the sectoral point of view.
Furthermore, the island is characterised by its extensive political, cultural and economic ties with the EU. Formal relations with the EU date back to 1972 with the signing of an Association Agreement which was basically a trade agreement. In 1987, a Customs Union Agreement was signed between Cyprus and the EU. The relations of Cyprus and the EU entered into a new dimension with the application of Cyprus for full membership to the EU in July 1990. Accession negotiations began in 1998. The EU constitutes Cyprus' main trading partner absorbing more than 55% of its domestic exports and supplying around 50% of the total imports to Cyprus. Furthermore, around 70% of tourists originate from EU countries. The last two decades have witnessed the gradual transformation of Cyprus into an international centre for tourism, transit trade, international business and maritime activities and services in general.
In addition, Cyprus maintains also close political and trading ties with the countries in the Middle East region, both the Arab world and the Israelis as well as with the former socialist countries of Central and Eastern Europe.
Throughout its long history, the island of Cyprus has played a central role in the economic activity of the Middle East region and has developed into an important trading centre.
The attraction of foreign direct investment, including the promotion of joint ventures between Cyprus and foreign enterprises, has always constituted a major objective of the government policy, aiming at facilitating the transfer of advanced technology and know-how. Foreign investors benefit from tax incentives and the relatively low level of taxation in Cyprus in general. In addition, Cyprus has been signatory to the Convention for the Settlement of Disputes between States and Nationals of Other States and it has signed bilateral agreements with a significant number of other countries for the avoidance of double taxation.
Furthermore, the government of the Republic of Cyprus has recently proceeded with the liberalisation and simplification of the procedures governing the approval of foreign direct investment. Recently, Cyprus has temporarily closed the Chapter of Free Movement of Capital.
This means that as from the 1st of January 2001 the ceiling on the interest rate has been abolished. Money markets have since continued to function in an orderly manner and rates are already beginning to decline. This development has been proceeding hand in hand with the liberalisation of capital movements by the Central Bank of Cyprus.
Direct investments in Cyprus by residents of the EU member states and by Cypriot residents in the EU have been liberalised, blocked accounts have been abolished and medium and long term borrowing by Cypriot residents in foreign currencies is now free.
Moreover, the Central Bank of Cyprus and the government of the Republic of Cyprus have continued with their policy of strengthening and effectively monitoring the enforcement of anti-money laundering legislation. It is important to note that an IMF mission invited to Cyprus has concluded that after a detailed and in-depth investigation, current anti-money laundering measures in Cyprus are effective.
Cyprus has also developed to an international shipping centre for the conduct of maritime activities and for the rendering of shipping services worldwide. Cyprus ranks fifth in the list of the leading maritime nations. This development is attributed to the comparative advantages of Cyprus as well as the excellent services offered to the sector. However, Cyprus cannot be regarded as an opportunity flag state.
The government of the Republic of Cyprus has ratified major international conventions on maritime safety, prevention of sea pollution, training, certification and watch keeping of seafarers and limitation of ship-owners' civil liability in case of oil pollution damage and Conventions on maritime labour. It has also hired inspectors both in Cyprus and in foreign ports, with a view to upgrading the safety conditions of Cypriot vessels. Furthermore, in the framework of its harmonization with the acquis, Cyprus has temporarily closed the Chapter on Transport, thereby satisfying the EU criteria in this area.
Cyprus has also become in recent years one of the main transit trade centres in the region of the Eastern Mediterranean, a development attributed inter alia to the minimal but efficient customs formalities and a reliable handling and delivery system. The island is also being extensively used as a regional entrepot for the Middle East region, as reflected in the remarkable expansion of re-exports from Cyprus during the last decade.