The economy of Cyprus is a service-based economy, with tourism, financial services, and shipping being the main sectors. Cyprus has a strong and diversified economy which is supported by its strategic location in the Eastern Mediterranean, close to both Europe and the Middle East. The country’s GDP per capita is one of the highest in Europe and its unemployment rate is among the lowest.
According to cheeroutdoor, the main sector of Cyprus’ economy is tourism which has been a major contributor to its economic growth over recent decades. The country has a well developed tourist infrastructure with many world class hotels, resorts, restaurants, beaches and historical sites. In addition to this, Cyprus has become increasingly popular as a destination for medical tourism due to its competitive prices when compared to other countries in Europe.
Financial services are another important sector of the Cypriot economy contributing around 12% of GDP annually. This includes banking services as well as investment funds management firms that draw foreign investors from all around the world. The country also has a well developed stock exchange that facilitates trading on both local and international markets.
Shipping is another key sector for Cyprus with over 4500 registered vessels flying under its flag making it one of the largest ship registries in Europe. The country’s strategic location at the crossroads between Europe and Asia makes it an ideal port for international shipping companies looking to transport goods in this region. This sector contributes significantly to economic growth through taxes paid by companies operating within this industry as well as job creation for local residents.
In addition to these sectors other important contributors include agriculture, manufacturing and construction which together account for almost 15% of GDP annually. Manufacturing includes industries such as food processing while construction covers infrastructure projects such as roads, bridges and buildings among others. Agriculture mainly focuses on citrus fruits production which provides employment opportunities for many rural households throughout the island nation.
Abbreviated as CYP by abbreviationfinder.org, Cyprus is an important trading center in the eastern Mediterranean from ancient times as well as recent times, and still plays an important role as a center for international trade and finance, with a strategic location especially between Europe and the Middle East. This position was strengthened as a result of the war in Lebanon in the 1980s, when a number of foreign banks and other commercial enterprises chose to relocate their offices from Beirut to Cyprus. From the 1990s, a number of Russian business enterprises have also established themselves in Cyprus, which further strengthened their position as a financial center. The traditional mainstay of the island’s business – agriculture – is still important, although relatively reduced; Cyprus has significant exports including of fruits and potatoes. The service sector, not least related to tourism, is significant.
Both agriculture and tourism were severely affected by the political and geographical division of Cyprus in 1974. As a result of Turkey’s invasion, the country was divided into one Greek-Cypriot part in the south (the internationally recognized Republic of Cyprus) and one Turkish-Cypriot part in the north (an unrecognized self-proclaimed republic). The division had far-reaching consequences for the country’s economy both in the short and long term, with a sharp decline in both agricultural production and tourist visits. The invasion led to large flows of refugees and a number of families lost their homes, farms and other businesses. Most of the best agricultural land went to the Turkish-Cypriot part. Much of the country’s industry and many of the tourist centers were also located in the Turkish-Cypriot section; the same became the largest port city, Famagusta.
Despite losing much of its business in 1974, the Republic of Cyprus (the Greek-Cypriot part; Southern Cyprus) has by far the most extensive economic development of the two parts. This is also because the Greek-Cypriot part is internationally recognized, while the Turkish-Cypriot part has by far become internationally isolated, and strongly linked to Turkey. Northern Cyprus was therefore heavily dependent on financial assistance from Turkey, which itself has occasionally had financial problems. With an international boycott since 1983, exports have hardly gone to countries other than Turkey, and with little tourism other than from Turkey, Northern Cyprus has been economically lagging behind the Republic of Cyprus. Already from the mid-1970s there has been significant economic growth in the south, in agriculture and industry as well as tourism, shipping and finance – and in 1991 Cyprus was removed from the World Bank’s list of developing countries. With its application for EU membership from 1990, (Southern) Cyprus adapted to the EU’s internal market through the 1990s, until the country became a full member in 2004. To position for membership, Turkey signed a free trade agreement with the EU member Cyprus in 2005. The year before was barred from trade between the two parts of the country removed, which reduced the isolation of northern Cyprus somewhat. One economic dispute between the South and the North is the right to property confiscated in the absence of their original owners, as a result of the 1974 escape. This property is particularly true of Greek Cypriots – the largest refugee group – in the north. which reduced the isolation to Northern Cyprus somewhat. One economic dispute between the South and the North is the right to property confiscated in the absence of their original owners, as a result of the 1974 escape. This property is particularly true of Greek Cypriots – the largest refugee group – in the north. which reduced the isolation to Northern Cyprus somewhat. One economic dispute between the South and the North is the right to property confiscated in the absence of their original owners, as a result of the 1974 escape. This property is particularly true of Greek Cypriots – the largest refugee group – in the north.
Prior to the division in 1974, agriculture employed 35% of the workforce, accounting for half of the island’s exports. Agriculture is still an important trade route, especially in Northern Cyprus. While agriculture accounted for almost 8% of employment in the south in 2003, the figure in the north was approx. 15%. The contribution to GNI was 4.3% and 9.5% respectively in the same year.
The same crops are grown in both parts of the island: barley, wheat, potatoes, grapes, tobacco, olives and not least citrus fruits (oranges, lemons, grapefruit). Most of the citrus groves were in the north as of 1974, and citrus fruit has become an important export item from the Turkish-Cypriot part. In the south, vegetables and potatoes are grown especially for export. Approximately 1 / 5 of arable soil is irrigated, but water represents a limiting factor for production; Northern Cyprus has imported water from Turkey. The livestock team includes sheep and goats.
Modest fishing is conducted.
Industrial production fell after the split in 1974, when much of the industry remained in the Turkish-Cypriot part. From 1975 there was a rapid development of an industrial sector in the Greek-Cypriot part, especially for export-oriented production of textiles and footwear. In the 1990s, this industry lost much of its importance due to. increased competition from Asia, and the pharmaceutical industry became the leading industrial company in Cyprus. Furthermore, wine and other agricultural products are produced, both for domestic and for export. In the Turkish-controlled part, industrial production has stagnated, following rapid growth in the textile industry in the 1980s.
Cyprus is quite rich in minerals, and has been known since ancient times for its copper ore. However, mining has declined sharply since 1974. limestone and sand. The majority of the quarrying takes place in the Greek-Cypriot part of the country.
The main source of energy is oil, and Larnax has both oil port and oil refinery. The electricity supply comes from oil-based thermal power plants, but water and solar energy are also utilized. In 2002 it was decided to import liquefied natural gas as a partial substitute for oil for the heat plants; Gas pipeline plans, from Egypt via Syria, have also been investigated.
Cyprus does not have large commodity exports, and therefore normally significant trade deficits abroad, which are offset by tourism revenues and trade and shipping. While the main export goods up to the 1990s were clothing, textiles and footwear, this production and export from this sector has decreased, while exports of fruits and vegetables have increased. Imports include: textiles, machinery, transport equipment, oil and food.
- COUNTRYAAH: Find major trading partners of Cyprus, including major exports and major imports with latest trade value and market share as well as growth rate.
The EU (and especially the United Kingdom) as well as the United States are the main trading partners of the 1980s, when trade with Middle East countries, especially Lebanon and Egypt, decreased. Until 2005, trade in the Turkish-Cypriot Northern Cyprus was dominated by Turkey, with some trade also with the UK and the US. Exports from this part of Cyprus consisted of food and industrial products. Until 2003, trade between the two parts of Cyprus was minimal.
Transport and Communications
The Greek Cypriot part of the island has developed into a center for maritime trade, with strong growth in the registered trading fleet around 1990, when a number of shipping companies established themselves in the country.
Prior to the division in 1974, Gazimağusa (Famagusta) was the island’s most important port city with 83% of the total freight volume, but remained in the northern part of the island. Since then, Larnax (Larnaca) and Limassol have been extended to replace Famagusta in the south; In addition, a new port is being built in Paphos.
Note: the capital city of Cyprus is Nicosia (Lefkoşa in Turkish) with a population of 238,000 in the Greek Cypriot part (2014) and 57,000 in the Turkish Cypriot part (2012). Other major cities include In the south: Limassol with a population of 182 400, Larnaca with a population of 85 900, Paphos with a population of 64 300 (2014). In the north: Gazimagusa (Famagusta) with a population of 40 900, Girne (Kyrenia) with a population of 33 200, Güzelhurt (Morfou) with a population of 18 900 (2012).
There are no railways in Cyprus, but the road network is relatively well developed. However, the two parts of the island each have their own transport system, and there is no regular connection between the north and the south. With the opening of the so-called green line between north and south in 2003, some previous connections were opened.
Levkosía International Airport (Nicosia) has been closed since 1974; new international airports have been opened at Larnax and Paphos in the Greek Cypriot part of the island.
From the late 1990s, the government has prioritized the development of (Southern) Cyprus as a center for regional telecommunications. satellite communication between Europe, the Middle East and Asia. In 2003, Cyprus and Greece jointly launched a telecom satellite from Cape Canaveral, Florida. Incentives are given to establishments in the IT sector.