Economic miracle

One of the surprising things about Cyprus is its high level of economic development. Everything is new. Nicosia is sparkling. Its shopping and business districts can rival in size and luxury those of the world’s richest cities. Jewellers, luxury boutiques, banks and the offices of major companies are everywhere. In the southern section of Nicosia, that is. Although not without its charms, the north of the city that lies in the occupied zone has a feel of abandon.

Port of Paphos 2008.

Before 1974, almost three-quarters of economic activity were concentrated in the north of the country. The occupation caused 40 per cent of the population to take to the roads, residing in makeshift shelters. The economy was in freefall. Yet in less than 15 years Cyprus was a nation rebuilt.

Marios Tsiakkis, Director of Industry Department at the Cyprus Chamber of Commerce and Industry, says this ‘Cypriot miracle’ is due to a determination by all sections of the population. He speaks emotionally of how the trade unions spontaneously appealed for a cut in wages as their contribution to the reconstruction effort.

By 1990, the feat was achieved. Today, considers Mr. Tsiakkis, Cyprus is facing another challenge: that of competitiveness – on the one hand from Europe and on the other from China and other Asian countries. Agriculture currently accounts for 3.5 per cent of the economy, manufacturing industries 10 per cent and services 74 per cent. “We must evolve further towards a knowledge-based industrial economy with high added values. We are encouraging Cypriot companies to invest in research and development projects and innovation. The Chamber of Commerce is working with the Public University of Cyprus. It has set itself the task of acting as a catalyst between the university and enterprise.”

Of the 74 per cent share of the economy represented by services, tourism accounts for 20 per cent. Other important branches are financial services, shipping, the booming construction industry, and the accounting and audit services used by many major international companies.

At 10 per cent, the low level of corporate tax is a big investment draw. What’s more, Cyprus has sealed agreements with about 40 countries around the world to avoid double taxation. Last but not least, wages in Cyprus are lower than in most EU countries (about 84 per cent of the EU average). The quality of the roads and communication systems, the commonplace use of English, the advanced education and health systems, and a good social environment combine to secure the country’s excellent reputation among foreign investors. And don’t forget, insists Tsiakkis, the security, an agreeable climate and the beauty of Cyprus.

Cyprus’s attraction for foreign investors and residents was very evident in the property boom. This explains why, within business circles that generally favour reunification, members of the construction sector are especially supportive. They are already looking ahead to the billions of euros that would flow into the north of the country in the wake of reunification.


Hegel Goutier

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