Cyprus Economy

Basic Characteristics - The Cypriot economy is a small, robust and fairly flexible economy, and has shown itself able to adapt to rapidly changing circumstances. Intertemporally, the Cypriot economy is characterized by a very satisfactory rate of growth (the average annual rate of growth of GDP amounted to 5,1%, in real terms, over the period 1961-2003), full employment conditions and internal and external macroeconomic stability.

The predominant and continuously expanding share of the services sectors (55% of GDP in 1980, 66% in 1990 and 75,7% in 2003) at the cost of both the primary sectors of economic activity, agriculture and mining and quarrying and the secondary sectors of manufacturing and construction, reflects the comparative advantages, which Cyprus enjoys in the sectors of services.

The main objectives of the Strategic Development Plan covering the period 1999-2003 were the completion of the harmonization process and the creation of the necessary structures for the effective implementation of the acquis communautaire as well as the preparation of the economy in view of the accession of Cyprus to the EU, the parallel attainment of the three-fold goal of growth, macroeconomic stability and social cohesion, the restructuring of all sectors of the economy, the modernization of business units, the utilization of Cyprus comparative advantages, the enhancement of its competitiveness and its adaptation to emerging conditions within the context of globalization, the upgrading of the role of Cyprus as a regional and international services centre of excellence, the adaptation to the information society and the reform of the public sector.

The Central Bank of Cyprus was established in 1963 as an autonomous institution in accordance with the Central Bank of Cyprus Law 1963. Since July 2002, the Central Bank has been governed by the Central Bank of Cyprus Law 2002.

The Co-operative Movement was introduced in Cyprus at the beginning of the twentieth century and is considered as one of the most powerful and well organized Co-operative movements on a worldwide basis.

The Early Years of the Tourist Industry – The Turkish Invasion and the Subsequent Reconstruction - The foundations of tourism in Cyprus were laid in the early sixties. Its progress had been smooth and successful until the summer of the 1974 Turkish invasion. .

Cyprus, due to its small domestic market and the open nature of its economy, considers access to international markets as of utmost importance. As a result, trade has always been one of the main sectors of the Cyprus economy, contributing considerably to the economic growth of the island.

Even though the blow inflicted on the manufacturing sector by the Turkish invasion of 1974 was severe, recovery during the 1975-83 period was remarkable. By 2002 the sector accounted for about 10% of Gross Domestic Product (GDP) and 12% of employment.