Economic trends
Cyprus has an open free-market economy, based on services. Cyprus became a full member of the EU on May 1, 2004, which has been an important milestone in its economic development. GDP growth rate has been stagnant for several years. The Cypriots are among the most prosperous people in the Mediterranean region with GDP per capita of around USD 21,000. The unemployment rate is less than 5% and the inflation rate is around 2%.
The global economic crisis has affected Cyprus, particularly in the tourism sector, with a drop in European tourist in-flow and in the real estate sector, which is also dependant on foreign sales. There was a general economic slow down in 2009 that is expected to continue in 2010.
In order to help the banking sector and Cypriot SMEs, the European Investment Bank (EIB) gave a loan amounting to a total of Euro 228 million to three of the biggest banks of the Island.
Main branches of industry
In the past two decades, Cyprus' economy has shifted from agriculture to light manufacturing and services.
The agricultural and mining sectors contribute around 5% to the GDP and employ around 5% of the active population. The main crops are wine grapes, potatoes, cotton and fruits. Mineral resources are limited and are made up of mainly copper, pyrites, chrome, asbestos, and gypsum.
The manufacturing industry (mainly industrial food-processing, paper, chemical products, textiles, metal products, and petroleum refining) accounts for 10% of the GDP, but its competitiveness is declining mainly due to high labor costs.
The tertiary sector contributes approximately two-thirds to the GDP and employs 70% of the active population. Tourism and maritime transportation are considered to be the two pillars of the Cypriot economy. Offshore activities are led by foreign-capital companies based in Cyprus, whose commercial activities are executed exclusively outside Cyprus, giving them substantial tax benefits. Cyprus has the sixth largest shipping fleet in the world.
International trade
The geographical location of Cyprus (the country being a bridge between West and East), along with its good airline and telecommunication infrastructures, enabled the country to turn itself into an important regional and international business center.
More than 50% of its trade is done with the EU. Cyprus' three main export partners are France, the United Kingdom and Greece. The main export commodities are electric & electronic equipment, fuels & oil, vehicles and pharmaceutical products. The three main import partners are: Greece, Italy and the United Kingdom. Cyprus mainly imports hydrocarbons, vehicles, machinery, iron and steel.
Cyprus' trade balance is traditionally in deficit, because the country has to import extensively in order to satisfy domestic demand. Cyprus also depends on imports for its energy supplies.
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