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Cyprus Economy

\"Cyprus Cyprus is back on a growth track and has been ranked as one of the fastest growing EU economies. Cyprus has shown remarkable resilience following the financial crisis of 2013 and has implemented tough austerity measures to restructure and diversify its economy. Indicatively, in July 2012, Cyprus became the fifth euro zone government to request an economic bailout program from the European Commission, the European Central Bank, and the International Monetary Fund - known collectively as the "Troika". This was mainly due to serious problems surfaced in the Cypriot financial sector in early 2011 as the Greek fiscal crisis and euro zone debt crisis deepened. Cyprus's borrowing costs had been escalated because of its exposure to Greek debt. However, the country surpassed all expectations exiting recession in 2015 (a year earlier than first projected) and continuing to grow in 2016. Recent economic indicators, particularly in relation to the tourism sector, as well as recent preliminary GDP data exhibit an even more positive trend than expected. At the same time, the economic recovery of Cyprus has been verified by the recent upgrades of the sovereign ratings of the main credit rating agencies, which has assisted the gradual return to the markets.

The socio-economic indicators for the last six years are demonstrated below:

S O C I O - E C O N O M I C   I N D I C A T O R S

 

Units

2016

2015

2014

2013

2012

2011

Real GDP growth

%

2.8

1.7

-1.5

-6

-3.2

0.3

Inflation rate

%

-1.4

-2.1

-1.4

-0.4

2.4

3.3

Unemployment rate

%

13.2

12.9

16.6

16.4

11.9

7.9

Current account balance

% of GDP

-5.3

-2.9

-4.3

-4.9

-6

-4.1

Cyprus Government Debt

% of GDP

107.8

107.5

107.1

102.2

79.3

65.2

Population (free area)

000’s

855

848

847

858

866

862

GDP per capita in euro €

000’s

21000

20800

20600

21000

22,500

23,200

Currency
As of 1st of January 2008 the official currency of Cyprus is the Euro (€).

Foreign Investment
The strategic location of the island, the high calibre and well-trained human resources, the excellent climate and the reasonably developed infrastructure, are some of the factors, which make Cyprus an attractive place for foreign investment. The favourable tax regime as well as other incentives, such as a free industrial zone area, make Cyprus an ideal location for international businesses when structuring their operations.

Transit Trade
Cyprus is one of the leading transit centres in the Mediterranean and the most important in the Eastern Mediterranean.
The island’s strategic location combined with the existence of other favourable factors, e.g. efficient port facilities, advanced business infrastructure, minimal customs formalities and a stable political environment helped in the development of the container transhipment business in Cyprus which started in the late 1970s.

About 120 shipping lines include Cyprus in their regular schedules and 6.000 ships totalling 18 million net registered tonnes call at Cypriot ports each year. The Limassol and Larnaca ports are the island’s main gateways handling well over 6 million tonnes or two-thirds of the total volume of sea borne cargo, including the entire traffic in transit. Both ports are increasingly being used as regional warehouse and distribution centres. They also constitute a major container trans-shipment centre in the eastern Mediterranean.

The Cyprus Stock Exchange (CSE)
\"InvestmentThe CSE is a legal entity in the form of a public corporate body. It is governed by the CSE Council and is supervised by the Cyprus Stock Exchange Committee (CySEC) both of which are appointed by the Government. The CySEC oversees the operation of the market. The Council is responsible for the operation and management of the CSE. The Stock Exchange Law for the regulation of the securities market in Cyprus and for the establishment and operation of the CSE was passed by the House of Representatives in April 1993. The Council of the CSE and the CySEC were appointed by the Council of Ministers in December 1993 with the responsibility of preparing detailed regulations to govern the operation of the CSE.

The Stock Exchange regulations were prepared and passed as legislation in 1995 and the CSE commenced operations officially on 29 March 1996. The legal framework for the CSE is largely based on the relevant EC Directives and practices, adjusted, where this was considered necessary, to local conditions. The Law and Regulations which have been approved by the House of Representatives, provide for a framework, which aims to foster the orderly and efficient trading of securities.

The process of acquiring shares by foreigners is simple enough and is more or less similar to that applicable to locals. Payment for any transaction by foreign and Cypriot emigrants alike should be made through external accounts.

The Stock Exchange sets regulations for the following:

  • Prerequisites for member firms registration
  • Member's obligations-Code of Conduct
  • Trading rules
  • Clearing and settlement
  • Disciplinary powers of the CSE relating to members and employees of the Stock Exchange
  • Obligations of companies after floatation
  • Announcements of events and disclosure of directors' interests
  • Common Compensation Fund
  • Commissions and fees
  • Mergers & Acquisitions
For more information on how to explore the opportunities offer by dynamic Cyprus Economy, contact our firm of Cyprus Chartered Accountants.