Cyprus Economy Profile 2009

Economy - overview

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for 78% of GDP. Tourism, financial services, and real estate are the most important sectors. Erratic growth rates over the past decade reflect the economy's reliance on tourism, which often fluctuates with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy in the area under government control has grown at a rate well above the EU average since 2000. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005 and adopted the euro as its national currency on 1 January 2008. An aggressive austerity program in the preceding years, aimed at paving the way for the euro, helped turn a soaring fiscal deficit (6.3% in 2003) into a surplus of 1.2% in 2008, and reduced inflation to 5.1%. This prosperity will come under pressure in 2009, as construction and tourism slow in the face of reduced foreign demand triggered by the ongoing global financial crisis. Growth is expected to slow to less than 2%, which would be its lowest level since 2003. As in the area administered by Turkish Cypriots, water shortages are a perennial problem; a few desalination plants have been added to existing plants over the last year and are now on line. After 10 years of drought, the country received substantial rainfall from 2001-04. Since then, rainfall has been well below average, making water rationing a necessity.

GDP (purchasing power parity)

$22.7 billion (2008 est.)
$21.89 billion (2007 est.)
$20.97 billion (2006 est.)
note: data are in 2008 US dollars

GDP (official exchange rate)

$24.94 billion (2008 est.)

GDP - real growth rate

3.7% (2008 est.)
4.4% (2007 est.)
4.1% (2006 est.)

GDP - per capita (PPP)

$28,600 (2008 est.)
$27,800 (2007 est.)
$26,700 (2006 est.)
note: data are in 2008 US dollars

GDP - composition by sector

agriculture: 2.1%
industry: 19.6%
services: 78.3% (2008 est.)

Population below poverty line

NA%

Labor force

397,000 (2008 est.)

Labor force - by occupation

agriculture: 8.5%
industry: 20.5%
services: 71% (2006 est.)

Unemployment rate

3.6% (2008 est.)
3.9% (2007 est.)

Household income or consumption by percentage share

lowest 10%: NA%
highest 10%: NA%

Distribution of family income - Gini index

29 (2005)

Investment (gross fixed)

23.3% of GDP (2008 est.)

Budget

revenues:: $11.19 billion
expenditures:: $10.96 billion (2008 est.)

Public debt

49.1% of GDP (2008 est.)
74.9% of GDP (2004 est.)

Inflation rate (consumer prices)

4.7% (2008 est.)
2.4% (2007 est.)

Central bank discount rate

3% (31 December 2008)
5% (31 December 2007)
note: this is the European Central Bank's rate on the marginal lending facility, which offers overnight credit to banks in the euro area

Commercial bank prime lending rate

NA% (31 December 2008)
6.74% (31 December 2007)

Stock of money

$NA (31 December 2008)
$4.094 billion (31 December 2007)
note: this figure represents the US dollar value of Cypriot pounds in circulation prior to Cyprus joining the Economic and Monetary Union (EMU); see entry for the European Union for money supply in the euro area; the European Central Bank (ECB) controls monetary policy for the 16 members of the EMU; individual members of the EMU do not control the quantity of money and quasi money circulating within their own borders

Stock of quasi money

$NA (31 December 2008)
$43.93 billion (31 December 2007)

Stock of domestic credit

$NA (31 December 2008)
$52.09 billion (31 December 2007)

Industries

tourism, food and beverage processing, cement and gypsum production, ship repair and refurbishment, textiles, light chemicals, metal products, wood, paper, stone, and clay products

Industrial production growth rate

4.1% (2008 est.)

Electricity - production

4.52 billion kWh (2007 est.)

Electricity - production by source

fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (2001)

Electricity - consumption

4.151 billion kWh (2006 est.)

Electricity - exports

0 kWh (2007 est.)

Electricity - imports

0 kWh (2007 est.)

Oil - production

0 bbl/day (2008 est.)

Oil - consumption

57,830 bbl/day (2006 est.)

Oil - imports

55,970 bbl/day (2005)

Oil - exports

0 bbl/day (2005)

Oil - proved reserves

NA bbl

Natural gas - production

0 cu m (2007 est.)

Natural gas - consumption

0 cu m (2007 est.)

Natural gas - exports

0 cu m (2007 est.)

Natural gas - imports

0 cu m (2007 est.)

Natural gas - proved reserves

0 cu m (1 January 2006)

Current Account Balance

$-4.671 billion (2008 est.)
$-2.595 billion (2007 est.)

Agriculture - products

citrus, vegetables, barley, grapes, olives, vegetables; poultry, pork, lamb; dairy, cheese

Exports

$1.689 billion (2008 est.)
$1.483 billion (2007 est.)

Exports - commodities

citrus, potatoes, pharmaceuticals, cement, and clothing

Exports - partners

Greece 20.1%, UK 10.8%, Germany 6% (2008)

Imports

$9.876 billion (2008 est.)
$7.957 billion (2007 est.)

Imports - commodities

consumer goods, petroleum and lubricants, intermediate goods, machinery, transport equipment

Imports - partners

Greece 16.9%, Italy 10.7%, UK 8.7%, Germany 8.3%, Israel 8.2%, China 5.3%, Netherlands 4.1%, France 4% (2008)

Reserves of foreign exchange and gold

$1.003 billion (31 December 2008 est.)
$6.507 billion (31 December 2007 est.)

Debt - external

$33.17 billion (31 December 2008 est.)
$26.97 billion (31 December 2007 est.)

Stock of direct foreign investment - at home

$15.69 billion (31 December 2008 est.)
$13.83 billion (31 December 2007 est.)

Stock of direct foreign investment - abroad

$6.962 billion (31 December 2008 est.)
$5.591 billion (31 December 2007 est.)

Market value of publicly traded shares

$NA (31 December 2008)
$29.48 billion (31 December 2007)
$15.9 billion (31 December 2006)

Economic aid - recipient

$15 million (2006)

Economic aid - donor

$25.9 million (2006)

Currency (code)

Cypriot pound (CYP); euro (EUR) after 1 January 2008

Currency (code)

CYP; TRL

Exchange rates

euros (EUR) per US dollar - 0.6827 (2008 est.), Cypriot pounds (CYP) per US dollar - 0.4286 (2007), 0.4586 (2006), 0.4641 (2005), 0.4686 (2004)

Fiscal year

calendar year

Economy of the area administered by Turkish Cypriots

Economy - overview: The Turkish Cypriot economy has roughly 40% of the per capita GDP of the south, and economic growth tends to be volatile, given the north's relative isolation, bloated public sector, reliance on the Turkish lira, and small market size. Agriculture and services, together, employ more than half of the work force. The Turkish Cypriot economy grew around 10.6% in 2006, fueled by growth in the construction and education sectors, as well as increased employment of Turkish Cypriots in the area under government control. GDP declined about 2.0% in 2007. The Turkish Cypriots are heavily dependent on transfers from the Turkish Government. Ankara directly finances about one-third of the "TRNC's" budget. Aid from Turkey has exceeded $400 million annually in recent years. The Turkish Cypriot economy probably will experience a sharp slowdown in 2008-2009 due to the global financial crisis, because the Turkish Cypriot financial sector is dominated by mainland Turkish banks, and because of its reliance on British and Turkish tourism, which has declined due to the recession.
GDP (purchasing power parity): $1.829 billion (2007 est.)
GDP - real growth rate: -2% (2007 est.)
GDP - per capita: $11,700 (2007 est.)
GDP - composition by sector: agriculture: 8.6%, industry: 22.5%, services: 69.1% (2006 est.)
Labor force: 95,030 (2007 est.)
Labor force - by occupation: agriculture: 14.5%, industry: 29%, services: 56.5% (2004)
Unemployment rate: 9.4% (2005 est.)
Population below poverty line: %NA
Inflation rate: 11.4% (2006)
Budget: revenues: $2.5 billion, expenditures: $2.5 billion (2006)
Agriculture - products: citrus fruit, dairy, potatoes, grapes, olives, poultry, lamb
Industries: foodstuffs, textiles, clothing, ship repair, clay, gypsum, copper, furniture
Industrial production growth rate: -0.3% (2007 est.)
Electricity production: 998.9 million kWh (2005)
Electricity consumption: 797.9 million kWh (2005)
Exports: $68.1 million, f.o.b. (2007 est.)
Export - commodities: citrus, dairy, potatoes, textiles
Export - partners: Turkey 40%; direct trade between the area administered by Turkish Cypriots and the area under government control remains limited
Imports: $1.2 billion, f.o.b. (2007 est.)
Import - commodities: vehicles, fuel, cigarettes, food, minerals, chemicals, machinery
Import - partners: Turkey 60%; direct trade between the area administered by Turkish Cypriots and the area under government control remains limited
Reserves of foreign exchange and gold: $NA
Debt - external: $NA
Currency (code): Turkish new lira (YTL)
Exchange rates: Turkish new lira per US dollar: 1.319 (2007) 1.4286 (2006) 1.3436 (2005) 1.4255 (2004) 1.5009 (2003)