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Cyprus Economy
Since the island’s independence in 1960, Cyprus has been gradually transformed from a mostly closed economy, based on agriculture and mining, into a service-based, export-oriented economy, with the private sector being the backbone of economic activity and the Government’s role restricted to monitoring the economy and the public utilities.

The Cyprus economy has performed remarkably well for most of this period. It has weathered significant external shocks and has taken advantage of a number of different opportunities. A key driving force has been the openness and the responsiveness to international markets and the investment in infrastructure essential for growth. Economic policies have been overall appropriate, providing a supportive framework of financial stability and expansionary fiscal policy when appropriate, resulting in strong employment growth and rising living standards.

For over half of century, sectors of tourism, shipping, banking, insurance, accounting and law, information, consulting and financial services recorded remarkable development with a dramatic increase of foreign investment. This led to a significant number of companies established in Cyprus, attracted by the strategic location of the island, a favourable tax system and a legal framework based on English Common Law and highly educated workforce.

The onset of the global financial crisis in 2008, reversed the growth path, affecting mostly the construction and tourism sectors and most recently the banking sector. The Government followed at the beginning expansionary fiscal policy in order to mitigate the impact of the crisis, focusing on the affected sectors. After Cyprus singed the MoU with the EC, ECB and IMF, fiscal consolidation became the primary objective, which took effect in a series of fiscal consolidation packages and the formation of a particularly tight budget, primary focusing on the expenditure side with measures of permanent character, addressing any structural issues.

The restoration of Cyprus’ credibility has been a top priority following the country’s €10-billion bailout deal and the unprecedented bail-in decision by the Eurogroup to impose losses on depositors in 2013. However, the hard work is finally paying dividends and with the banks successfully recapitalised with foreign investment, Cyprus’ economic recovery has been faster than many first projected.

The goals achieved by both Cyprus’ economy and banking sector over the last almost four years have been hailed impressive internationally. The successful and sooner-than-expected completion of the financial assistance programme in 2016, continuous credit rating upgrades, positive bank results and successful bond issues, have marked an end to prolonged uncertainty, and revived confidence in the country.

Cyprus has exceeded on almost every major economic indicator, as it has refocused its economy on tourism, shipping, construction and business services as well as supporting entrepreneurship and innovation.

With stronger growth on the horizon, new opportunities are springing up in the wake of rebuilding the Cypriot banking sector. Investment opportunities that could be tapped into by international banks and financial groups are mergers and acquisitions, private equity and venture capital projects as well as financing of infrastructure projects in the oil and gas industry, casino and resort development and other large scale projects.

Furthermore, to reduce its bank dependence, Cyprus has already turned its interest into alternative sources of finance such as bond markets and investment funds, also peer-to-peer lending and crowd funding are emerging as new finance models.

While international financial institutions and credit agencies project GPD growth rate of 2.5% for 2017 and 2.3% for 2018, it is more evident than ever that the island’s economy continues the recovery at a remarkable pace.

For further information and statistics on Cyprus Economy please visit:
 
The Central Bank of Cyprus  
 
The Ministry of Finance  
 
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Cyprus Trade Centre in London
The Cyprus Trade Centre in London operates under the auspices of the Cyprus Ministry of Energy, Commerce, Industry and Tourism as the economic and commercial section of the Cyprus High Commission in the United Kingdom. It is one of the twelve export promotion missions of the Republic of Cyprus abroad...LEARN MORE
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