Economy
Cyprus has successfully harmonised its economy with the acquis communautaire of the European Union (EU). Facing the challenge of harmonisation, the Cyprus economy has the great advantage of robustness and macroeconomic stability, comparable with many developed countries.
The Cyprus economy recorded real GDP growth of the order of 4,1% in the period 1995 - 2001, compared with an average growth rate of 3,5% in the accession countries and 2,4% in the euro area. It is noteworthy that this growth was recorded in an environment of full employment conditions, low inflation, stable and strong currency, as well as relatively low fiscal deficit. Furthermore, according to a recent bulletin of the European Central Bank, Cyprus's GDP per capita has reached 88% of the corresponding euro area average, while average GDP per capita in the accession countries does not exceed 40% of the euro area average. Cyprus expects to join the euro area 1n 1996.
The services sectors are the driving force of the economy. The main services sectors are hotels and restaurants, wholesale and retail trade, financial services, transport and communication, real estate, renting and business activities, and education.
Manufacturing
Manufacturing accounts for 10,8% of GDP and provides employment to 13,3% of the workforce. The main industries are food, beverages,
tobacco, textiles, clothing, footwear, leather goods, metal products, chemicals and plastic products.
Imports
Chief imports are raw materials, consumer and capital goods, transport equipment and fuels. In 2000, 51,7% of total imports come
from the EU, mainly the UK (10,8%), Italy (8,8%), Greece (8,6 %), Germany (7%) and France (4,4%). The USA accounted for 10,6%
of imports and Japan 5,8 %.
Exports
Major exports are clothing, footwear, pharmaceutical products, cement, cigarettes, furniture, paper goods, wines, potatoes and citrus
fruit. In 2000, 48% of domestic exports went to EU countries, mainly to the UK (17,2%), Greece (9,5%) and Germany (6,3%). Also 24,3 %
of exports went to Arab and 7,8% to Eastern European countries.
High Technology Industry
The Government is currently promoting the establishment of high technology industry through the creation of incubators and a research
and technological development centre.
Transhipment
On account of its geographical location Cyprus has developed into an important transhipment centre with a large volume of re-exports
going to the emerging markets of the Middle East and Central Europe.
Banking and shipping
Cyprus has developed into an international banking and business centre with over 30 foreign banks, two administered banking units
and over 1.000 fully-fledged overseas companies operating on the island. It has also become an important shipping centre and
currently ranks sixth in the world as a maritime nation.
The central geographical location of the island, British modelled legal system, availability of wide-ranging professional services,
excellent infra-structural facilities, advanced telecommunications network and widespread knowledge of English are some of the
factors that have helped create an ideal business environment for foreign firms.
Services
The tertiary or services sector is the fastest growing area and today accounts for about 75,4% of GDP and 69% of the gainfully
employed population. The sector includes tourism, transport and communications, trade, banking, insurance, accounting, real estate,
catering, public administration and business and legal services.
Health and Social Welfare
Free medical care in government hospitals is available for low-income families, government employees and refugees.
There are also over 100 private clinics with some 1.500 beds and a large number of practices offering a wide range
of medical services. The ratio of persons per doctor is 357:1.
A comprehensive social insurance scheme covers every working male and female and their dependants.
Benefits and pensions from the scheme cover unemployment, sickness, maternity, widows, injury at work, old age and death. Education
Education is compulsory up to the age of 15. Primary and secondary education is free. Cyprus has one university and 34 colleges and
institutions of further education.
In 1999/00 53% of students studying abroad and 57% enrolled on third level education courses in Cyprus were women.
Culture
Cultural life finds expression through the creative arts. Literature, poetry, concerts, opera, dance, painting and sculpture are some of its manifestations.
There are also a number of museums and art galleries.
Media
Freedom of expression and media pluralism are safeguarded by the Constitution and the relevant press and radio and television
station laws.
Exchange Control and Foreign Investment
Current payments abroad are exempt from exchange control. Foreign exchange is freely purchased and sold in connection with such
transactions. The Central Bank, in its effort to harmonise the economy with the Acquis Communautaire, is continuously relaxing
the remaining restrictions on capital movements. Specifically, the following policy applies to investments in Cyprus by non-residents
and investments abroad by Cypriots:
There are no restrictions on either direct or portfolio investments from member states of the European Union (EU). For investments
from other countries, certain restrictions are still in force concerning the maximum percentage and/or the minimum amount of
participation depending on the sector of the investment. In particular, natural or legal persons from non-EU countries may
acquire up to 49% of the share capital of companies listed on the Cyprus Stock Exchange.
Residents of Cyprus are allowed to undertake direct investment abroad without restriction as to the amount or the sector of
the investment. The transfer of capital abroad is affected as soon as the Central Bank is satisfied that it concerns a
genuine direct investment and not portfolio investment (e.g. purchase of foreign stocks or bonds) or deposits with foreign banks.
Every resident household (including parents and children under 25) is entitled to transfer up to CYŁ200.000 for the purpose of
acquiring a secondary residence abroad for its own use.
Since the beginning of 2001, commercial banks in Cyprus have been authorised to grant medium and long-term loans in foreign
currency to residents without reference to the Central Bank. In line with the harmonisation program agreed with the EU the
remaining exchange control restrictions, which mainly concern outward capital flows by residents and include portfolio investments
as well as short-term loans and deposits with foreign banks, will be removed gradually until the time of accession.
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