Cyprus Economy

The events of 1974-75, which led to the partition of the national territory, originating two distinct political realities, had a conspicuous impact on the country’s economy, initiating highly differentiated development processes for the two areas of the island. The northern Turkish Cypriot region is the one that has suffered most from the end of the unitary state, also due to the fact that, not possessing a nation status recognized by the international community, it encounters much more difficulties in finding financing and investors, and has therefore registered a significant decrease in production and a notable decrease in per capita income, which has become equal to half that of the residents of the Republic of Cyprus. In 1997 Turkey signed an agreement with the Northern State which provides for the allocation of aid for the development of tourism, education and industry. In the inflation rate there are now small differences between the two countries; in fact, it remained around 2.5% in the South and 2.7% in the Northern state, while in the past it had reached peaks of over 50% per year. The economy of the southern Greek-Cypriot region, after an initial period of difficulty, has instead experienced a trend positive, thanks to a rich irrigated agriculture, the development of tourism, maritime activities and strong industrial development. In 2000, the international community also ordered the country to take anti-money laundering measures given that the country’s tax system is particularly permissive towards the importation of foreign capital. The biggest problem in the South is certainly the instability of an economy based mainly on tourism and therefore heavily influenced by the fluctuations of the most powerful European economies and by international events. The main trading partners of the Republic of Cyprus are the EU countries, especially Great Britain, and these relations have intensified following the country’s entry into the Union in May 2004. The Northern Republic, on the other hand, will not be subject to European legislation nor will it be able to enjoy the benefits granted to member countries until Turkey enters the EU, even if the European Union, fearing its isolation, has promised the allocation of funds to promote it. Development. In 2006, the Republic of Cyprus recorded a GDP of US $ 24,943 million, divided between 2.1% of the primary sector, 19.6% of the secondary sector and 78.3% of the tertiary sector, with an increase of 3%. 7%.

As far as the individual sectors are concerned, agriculture is no longer the main one (as was traditionally the case); this is especially true for the Greek area, where this activity accounts for only 2.1% of the formation of the national product (against 5.3% for the Turkish part). More than cereals (barley and wheat above all) and other products destined for internal consumption, such as olives, tobacco, cotton, legumes, etc., generally grown in unprofitable micro-funds, weigh the products destined for export such as citrus fruits, some first vegetables (especially potatoes and carrots) and vines (both wine and raisins are renowned), which are instead reserved for extensive plantations and modern production techniques (irrigation affects only 5% of the surface agricultural). Typical local product are carobs. The contribution offered by wood is modest, coming mainly from the Olympus Mountains. Given the poverty of the soils and the aridity of the climate, livestock farming is a rather secondary activity, practiced extensively and generally transhumant; sheep and goats prevail. Beef must be imported. Equally not very important is fishing, carried out with traditional methods that are not very productive; except for the collection of sponges, which is widely practiced. Mining plays a certain role in the local economy; already in prehistoric times the iron and copper of Cyprus were known (the Latin name of copper, cuprum, derives from that of the island). In addition to the iron and copper pyrites, chromite, gypsum and salt are extracted, all extracted from quarries in the Tróodos mountains. According to allcountrylist, the industry, which contributes approx. 20% to the formation of national income, is the sector that has experienced (especially, once again, in the Greek part of the country) the most spectacular growth: the government incentives, combined with the low cost of the workforce, have attracted huge capital which have allowed the establishment of a myriad of small and medium-sized enterprises with a production directed towards export. Even if the basic industry is still enormously lacking, the light industry now has a fairly varied range of products. In addition to the processing of mining ones, the industrial activity is mainly aimed at the transformation of local agricultural and livestock products and is therefore essentially represented by tobacco factories, oil mills, winemaking complexes, breweries, shoe factories, cotton mills and wool mills. An oil refinery operates in Lárnaca, in addition to numerous cement factories. A sector particularly affected by the war was that of communication routes. Although completely devoid of railways, Cyprus had a good road network, the main routes of which radiated from Nicosia to the coastal centers. However, following the split, the Turkish Cypriot sector had to equip itself with new roads. Nicosia was also served by an important international airport, which has been closed to traffic since 1974 and has been replaced by the Lárnaca airport in the Greek sector and Ercan (formerly Tymbou) in the Turkish sector. The main ports are the aforementioned centers of Lárnaca, Limassól and Famagusta. Foreign trade, which takes place above all with Great Britain and, as far as the Turkish Cypriot state is concerned, with Turkey, reflects well the different economic situation of the two states: in both countries, machinery, vehicles and products prevail in imports. petroleum. In exports, light industry products come first in the Greek Cypriot state, while traditional agricultural products remain in the Turkish Cypriot one. The trade balance is seriously in deficit in both states; the Greek-Cypriot one, however, benefits from a significant contribution of currency coming from the remittances of the emigrants and from the sums paid by the British government for the occupation of the air bases (which remained in the Greek-Cypriot sector). A stock exchange was opened in Nicosia (Greek part) in 1996. Seaside tourism, especially in the Greek Cypriot area, is the country’s main economic source.