Review of Cyprus Economy Essay

771 Words 4 Pages

Cyprus is a small, services oriented (services account for approximately 76% of GDP) free market economy with a record of successful economic performance – Rapid growth, full employment conditions, low inflation & external and internal stability. In terms of per capita income, currently estimated at US $ 18,500, Cyprus is classified among the high income countries. It has good business and financial services, modern telecommunications, an educated labor force and a sound legal system. Cyprus' geographical location, tax incentives, and modern infrastructure also make it a natural hub for companies looking to do business with the Middle East, Europe, the former Soviet Union and North Africa.
Cyprus’ entry into
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The fiscal deficit rose to 6.3% from 4.6% of GDP, overshooting the Maastricht convergence criteria of 3%.
The agricultural sector grew by 1.5% and its contribution to GDP remained unchanged at 3.9%. Manufacturing shrank by 2% and its contribution to GDP slipped to 9.4%.
The construction sector posted a growth of 4% and its contribution to GDP climbed to 8% as a result of increased investment in private and public construction projects.
The hotel and restaurant sector shrank by 3.9% as tourist arrivals and revenues both fell. This sector’s contribution to GDP fell to 8.2%. Wholesale & retail trade grew by 0.5% (approximately 13% of GDP) while the financial sector also made only marginal gains contributing 6.3% to GDP. The remaining tertiary sectors saw growth, particularly property management as well as health and social welfare.
Tourist arrivals in 2003 fell by 4.76% to 2.303 million. The drop was attributed to the negative climate in the region because of conflict and threats of terrorist attacks and to the further slowdown in rates of growth in Cyprus’ main markets.


In recent years, Israel has become one of the major trading partners of Cyprus. The volume of trade between the two countries has increased considerably and there is strong potential for further increase in the coming years.
Total imports from Israel for 2003 were CYP 87,597,000 making