Cyprus Economy 2007

Economy - overview:
The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for 76% of GDP. Tourism and financial services are the most important sectors; erratic growth rates over the past decade reflect the economy's reliance on tourism, which often fluctuates with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy in the area under government control grew a healthy 3.7% to 3.8% per year in 2004, 2005, and 2006, well above the EU average. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005. The government has initiated an aggressive austerity program, which has cut the budget deficit to well below 3%, and the EU is expected to invite Cyprus to adopt the euro as its national currency on 1 January 2008. As in the area administered by Turkish Cypriots, water shortages are a perennial problem; a few desalination plants are now on line. After 10 years of drought, the country received substantial rainfall from 2001-04 alleviating immediate concerns. Rainfall in 2005 and 2006, however, was well below average making water rationing likely in 2007. The Turkish Cypriot economy has roughly 45% of the per capita GDP of the south, and economic growth tends to be volatile, given the north's relative isolation, bloated public sector, reliance on the Turkish lira, and small market size. The Turkish Cypriot economy grew around 10.6% in 2006, fueled by growth in the construction and education sectors, as well as increased employment of Turkish Cypriots in the area under government control. The Turkish Cypriots are heavily dependent on transfers from the Turkish Government. Ankara directly finances around one-third of the "TRNC's" budget. Aid from Turkey has reached over $400 million annually in recent years. Agriculture and services, together, employ more than half of the work force.

GDP (purchasing power parity):
area under government control: $18.04 billion
area administered by Turkish Cypriots: $4.54 billion (2006 est.)

GDP (official exchange rate):
area under government control: $16.37 billion (2006 est.)

GDP - real growth rate:
area under government control: 3.8%
area administered by Turkish Cypriots: 10.6% (2006 est.)

GDP - per capita (PPP):
area under government control: $23,000
area administered by Turkish Cypriots: $7,135 (2006 est.)

GDP - composition by sector:
area under government control: agriculture 3.2%; industry 19.5%; services 77.4% (2005 est.)
area administered by Turkish Cypriots: agriculture 10.6%; industry 20.5%; services 68.9% (2003 est.) (2006 est.)

Labor force:
area under government control: 380,000
area administered by Turkish Cypriots: 95,025 (2006 est.)

Labor force - by occupation:
area under government control: agriculture 7.4%, industry 38.2%, services 54.4% (2004 est.)
area administered by Turkish Cypriots: agriculture 14.5%, industry 29%, services 56.5% (2004 est.) (2004 est.)

Unemployment rate:
area under government control: 5.5% (2005 est.)
area administered by Turkish Cypriots: 5.6% (2004 est.) (2006 est.)

Population below poverty line:
NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices):
area under government control: 2.8% (2005 est.)
area administered by Turkish Cypriots: 9.1% (2004 est.) (2006 est.)

Investment (gross fixed):
area under government control: 21.2% of GDP (2006 est.)

Budget:
area under government control: revenues: $7.725 billion; expenditures: $8.005 billion (2005 est.)
area administered by Turkish Cypriots: revenues: $685.7 million; expenditures: $432.8 million (2003 est.) (2006 est.)

Public debt:
area under government control: 64.8% of GDP (2006 est.)

Agriculture - products:
citrus, vegetables, barley, grapes, olives, vegetables; poultry, pork, lamb; dairy, cheese

Industries:
tourism, food and beverage processing, cement and gypsum production, ship repair and refurbishment, textiles, light chemicals, metal products, wood, paper, stone, and clay products

Industrial production growth rate:
area under government control: 2.4% (2005 est.)
area administered by Turkish Cypriots: -0.3% (2006 est.)

Electricity - production:
area under government control: 3.926 billion kWh
area administered by Turkish Cypriots: 998.9 million kWh (2005)

Electricity - consumption:
area under government control: 3.651 billion kWh (2004)
area administered by Turkish Cypriots: 797.9 million kWh (2005)

Electricity - exports:
area under government control: 0 kWh (2005)

Electricity - imports:
area under government control: 0 kWh (2005)

Oil - production:
area under government control: 300 bbl/day (2005 est.)

Oil - consumption:
area under government control: 53,000 bbl/day (2004 est.)

Oil - exports:
NA bbl/day

Oil - imports:
NA bbl/day

Current account balance:
area under government control: $-1.051 billion (2006 est.)

Exports:
area under government control: $1.34 billion f.o.b.
area administered by Turkish Cypriots: $68.1 million f.o.b. (2006 est.)

Exports - commodities:
area under government control: citrus, potatoes, pharmaceuticals, cement, clothing and cigarettes
area administered by Turkish Cypriots: citrus, dairy, potatoes, textiles

Exports - partners:
UK 15.1%, Greece 14.2%, France 7.7%, Germany 4.9%, UAE 4.2% (2006)

Imports:
area under government control: $5.8 billion f.o.b.
area administered by Turkish Cypriots: $1.2 billion f.o.b. (2006 est.)

Imports - commodities:
area under government control: consumer goods, petroleum and lubricants, intermediate goods, machinery, transport equipment
area administered by Turkish Cypriots: vehicles, fuel, cigarettes, food, minerals, chemicals, machinery

Imports - partners:
Greece 17.6%, Italy 11.4%, Germany 9%, UK 8.9%, Israel 6.3%, France 4.3%, Netherlands 4.3%, China 4.2% (2006)

Economic aid - recipient:
area under government control: $NA
area administered by Turkish Cypriots: under a July 2006 agreement, Turkey plans to provide the area administered by Turkish Cypriots 1.875 billion YTL ($1.3 billion) over three years (600 million YTL in 2006, 625 million YTL in 2007 and 650 million YTL in 2008); Turkey has forgiven most past aid (2004)

Reserves of foreign exchange and gold:
area under government control: $4.613 billion
area administered by Turkish Cypriots: $NA (2006 est.)

Debt - external:
area under government control: $12.63 billion
area administered by Turkish Cypriots: $NA (2006 est.)

Stock of direct foreign investment - at home:
$NA

Stock of direct foreign investment - abroad:
$NA

Market value of publicly traded shares:
$6.583 billion (2005)

Currency (code):
area under government control: Cypriot pound (CYP)
area administered by Turkish Cypriots: Turkish New lira (YTL)

Exchange rates:
Cypriot pounds per US dollar: 0.4586 (2006), 0.4641 (2005), 0.4686 (2004), 0.5174 (2003), 0.6107 (2002)
Turkish lira per US dollar: 1.4451 (2006), 1.3436 (2005), 1.426 million (2004), 1.501 million (2003), 1.507 million (2002)