Cyprus Economy Overview
The Greek Cypriot economy is prosperous but highly susceptible to external shocks. Erratic growth rates over the past decade reflect the economy’s vulnerability to swings in tourist arrivals, caused by political instability in the region and fluctuations in economic conditions in Western Europe.
We now know that the exchange rate is pegged and 1 Euro will be worth 0.585274 Cyprus pounds. This of course was the old currency as everything is now in Euros.
Property prices in Cyprus have fallen in most areas but they are not expected to fall drastically due to the finite availability
On the 1st of January 2008 the Euro became Cyprus’ official currency while since the 10th of July 2007 the rate of the Cyprus Pound against the Euro has been fixed. The stability of the Cyprus Economy and its reaction to this prospect has been impressive. Very little pressure has been exercised; inflation stayed at low levels and unemployment is still one of the lowest worldwide despite a large influx of people from other European countries coming to the island looking for employment.
The healthy picture of the Cyprus Economy, the size of the island (remember, you cannot produce land…), it’s stability, its popularity and now its currency contribute to bright expectations for 2008. Additionally, Cyprus ranks as a very high preference for overseas investors from the United Kingdom, Russia, Ukraine as well as Scandinavian countries.
As in the Turkish sector, water shortages are a perennial problem; a few desalination plants are now on-line. After 10 years of drought, the country received substantial rainfall in 2011, alleviating immediate concerns. The Turkish Cypriot economy has roughly one-third of the per capita GDP of the south. Because it is recognized only by Turkey, it has had much difficulty arranging foreign financing and investment. It remains heavily dependent on agriculture and government service, which together employ about half of the work force.
To compensate for the economy’s weakness in the northern side, Turkey provides grants and loans to support economic development. Ankara provided $200 million in 2002 and pledged $450 million for the 2003-05 period. Future events throughout the island will be highly influenced by the outcome of negotiations on the UN-sponsored agreement to unite the Greek and Turkish areas.