Cyprus Economy Profile 2006

Economy - overview

The Republic of Cyprus has a market economy dominated by the service sector, which accounts for 76% of GDP. Tourism and financial services 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 grew a healthy 3.7% per year in 2004 and 2005, well above the EU average. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005. The government has initiated an aggressive austerity program, which has cut the budget deficit to below 3% but continued fiscal discipline is necessary if Cyprus is to meet its goal of adopting the euro on 1 January 2008. As in the area administered by Turkish Cypriots, water shortages are a perennial problem; a few desalination plants are now on line. After 10 years of drought, the country received substantial rainfall from 2001-03 alleviating immediate concerns. The Turkish Cypriot economy has roughly one-third of the per capita GDP of the south, and economic growth tends to be volatile, given north Cyprus's relative isolation, bloated public sector, reliance on the Turkish lira, and small market size. The Turkish Cypriot economy grew 15.4% in 2004, fueled by growth in the construction and education sectors, as well as increased employment of Turkish Cypriots in the Republic of Cyprus. The Turkish Cypriots are heavily dependent on transfers from the Turkish Government. Under the 2003-06 economic protocol, Ankara plans to provide around $550 million to the "TRNC." Agriculture and services, together, employ more than half of the work force.

GDP (purchasing power parity)

Republic of Cyprus: $16.81 billion; north Cyprus: $4.54 billion (2005 est.)

GDP (official exchange rate)

Republic of Cyprus: $15.4 billion (2005 est.)

GDP - real growth rate

Republic of Cyprus: 3.8%; north Cyprus: 10.6% (2005 est.)

GDP - per capita (PPP)

Republic of Cyprus: $21,600 (2005 est.); north Cyprus: $7,135 (2004 est.)

GDP - composition by sector

Republic of Cyprus: agriculture 3.7%; industry 19.8%; services 76.5% (2005 est.)
north Cyprus: agriculture 10.6%; industry 20.5%; services 68.9% (2003 est.)

Population below poverty line

NA%

Household income or consumption by percentage share

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

Inflation rate (consumer prices)

Republic of Cyprus: 2.6% (2005 est.); north Cyprus: 9.1% (2004 est.)

Investment (gross fixed)

Republic of Cyprus: 19.2% of GDP (2005 est.)

Labor force

Republic of Cyprus: 370,000, north Cyprus: 95,025 (2005 est.)

Labor force - by occupation

Republic of Cyprus: agriculture 7.4%, industry 38.2%, services 54.4% (2004 est.)
north Cyprus: agriculture 14.5%, industry 29%, services 56.5% (2004 est.)

Unemployment rate

Republic of Cyprus: 4% (2005 est.); north Cyprus: 5.6% (2004 est.)

Budget

revenues: Republic of Cyprus - $6.698 billion (2005 est.)
expenditures: Republic of Cyprus - $7.122 billion (2005 est.)
revenues: $685.7 million; north Cyprus - $231.3 million (2003 est.)
expenditures: north Cyprus - $432.8 million (2003 est.)

Public debt

Republic of Cyprus: 70.3% of GDP (2005 est.)

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

Republic of Cyprus: 0.4% (2005 est.); north Cyprus: -0.3% (2002 est.)

Electricity - production

Republic of Cyprus: 3.801 billion kWh; north Cyprus: NA kWh (2003)

Electricity - consumption

Republic of Cyprus: 3.535 billion kWh (2004); north Cyprus: NA kWh (2003)

Electricity - exports

0 kWh (2003)

Electricity - imports

0 kWh (2003)

Oil - production

Republic of Cyprus: 300 bbl/day (2005 est.)

Oil - consumption

Republic of Cyprus: 52,000 bbl/day (2003 est.)

Oil - imports

NA bbl/day

Oil - exports

NA bbl/day

Natural gas - production

0 cu m (2003 est.)

Natural gas - consumption

0 cu m (2003 est.)

Current Account Balance

Republic of Cyprus: $-962.3 million (2005 est.)

Agriculture - products

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

Exports

Republic of Cyprus: $1.237 billion f.o.b.; north Cyprus: $69 million f.o.b. (2005 est.)

Exports - commodities

Republic of Cyprus: citrus, potatoes, pharmaceuticals, cement, clothing and cigarettes; north Cyprus: citrus, potatoes, textiles

Exports - partners

France 17.7%, UK 17%, Greece 12.2%, Germany 5.7% (2005)

Imports

Republic of Cyprus: $5.552 billion f.o.b.;; north Cyprus: $415.2 million f.o.b. (2005 est.)

Imports - commodities

Republic of Cyprus: consumer goods, petroleum and lubricants, intermediate goods, machinery, transport equipment; north Cyprus: vehicles, fuel, cigarettes, food, minerals, chemicals, machinery

Imports - partners

Greece 17.3%, Italy 10.3%, UK 9%, Germany 8.4%, Israel 7.1% (2005)

Reserves of foreign exchange and gold

Republic of Cyprus: $4.429 billion; north Cyprus $NA (2005 est.)

Debt - external

Republic of Cyprus: $10.53 billion; north Cyprus: $NA (2005 est.)

Economic aid - recipient

Republic of Cyprus - $NA; north Cyprus - $700 million from Turkey in grants and loans, which are usually forgiven (2003-06)

Currency (code)

Republic of Cyprus: Cypriot pound (CYP); Turkish Cypriot area: Turkish New lira (YTL)

Exchange rates

Cypriot pounds per US dollar - 0.4641 (2005), 0.4686 (2004), 0.5174 (2003), 0.6107 (2002), 0.6431 (2001), Turkish lira per US dollar - 1.36 (2005), 1.426 million (2004), 1.501 million (2003), 1.507 million (2002), 1.226 million (2001)

Fiscal year

calendar year