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Cyprus Economy

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Cyprus Economy
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Cyprus Economy

The Turkish Republic of Northern Cyprus economy operates on a free enterprise system. The backbone of this system is the private services sector comprised mainly of such spheres as:

  • Trade
  • Tourism
  • Education
  • Construction
  • Light industry
  • Agriculture
  • Personal services

The economic performance in 2004

  • Total GDP - $1,766 billion
  • GDP per capita - $8,095 (nominal)
  • The growth rates - 9.6%

Conditions

Due to the partial lifting of travel restrictions between Turkish and Greek Cyprus in April 2003 almost seven million people have crossed the border between the two parts of the island. In August 2004, new EU rules allowed goods produced in the north to be sold in the south provided they met the EU rule of origin and sanitary/phyto-sanitary requirements, a plus for the Turkish Cyprus economy. In 2005, the North Cyprus economy adopted a new regulation "mirroring" the EU rules and allowing certain goods produced in the south to be sold in the north.

Outcomes

  • Relative stability of the Turkish Lira
  • Employment of over 5,000 Turkish Cypriots in the Greek Cypriot economy
  • Boom in the education and construction sectors

Constraints

  • Lack of private and governmental investment
  • High freight costs
  • Direct trade between Turkish Cyprus and Greek Cyprus has remained rather limited

Main trading partners

  1. Turkey - the main trading partner, supplying 60% of imports and absorbing over 40% of exports. Turkey also provides loans and financial assistance to TRNC. Ankara provided $200 million in 2002 and pledged $450 million for the 2003-2005 period. The Turkish aid goes towards developing light industry, banking, tourism, and higher-education institutions.
  2. The European Union - the second-largest trading partner of Turkish Cyprus economy, with a 25% share of total imports and 28% share of total exports. Total imports increased to $853.1 million in 2004 (from $477.7 million in 2003), total exports increased to $61.5 million (from $50.6 million in 2003).
  3. The United States - total imports were $7.1 million in 2004, while exports to the U.S. were less than $10,000.

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