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Cyprus has an open, free-market, serviced-based economy with some light manufacturing. Cyprus's accession as a full member to the European Union as of May 1, 2004, has been an important milestone in the course of its economic development. The Cypriots are among the most prosperous people in the Mediterranean region. Internationally, Cyprus is the "bridge" between West and East, with educated English-speaking population, moderate local costs, good airline connections, and telecommunications.


 

In the past 20 years, the economy has shifted from agriculture to light manufacturing and services. The service sector, including tourism, contributes 75.7% to the GDP and employs 70.7% of the labor force. Industry and construction contribute 19.7% and employ 21.3% of labor. Manufactured goods account for approximately 63.6% of domestic exports. Agriculture and mining is responsible for 4.6% of GDP and 8.0% of the labor force. Potatoes and citrus are the principal export crops.

The average rate of growth in the 1990s was 4.4%, compared with 6.1% in the 1980s. In the last two years (2002 and 2003), annual economic growth dropped to 2.0%, compared with 4.0% in 2001 and 5.1% in 2000. In 2003, unemployment accelerated to 3.5% of GDP, from 3.2% the year before. Inflation also recorded an increase to 4.1% from 2.8% in 2002. As in recent years, the services sectors, and tourism in particular, provided the main impetus for growth. Economic activity in manufacturing and agriculture remained about the same in 2003.

Trade is vital to the Cypriot economy: the island is not self-sufficient in food, and has few natural resources. The trade deficit decreased by 9.2% in 2003 (on account of a considerable reduction in imports), reaching $3.0 billion.

Cyprus must import fuels, most raw materials, heavy machinery, and transportation equipment. More than 50% of its trade is with the European Union, particularly with the United Kingdom.

Growth in 2004 is expected to accelerate to 3.5%, due to a revival in tourism. Unemployment is expected to remain around 3.6% in 2004, while inflation is forecast to drop considerably to 2.5%. The fiscal deficit is forecast to decline to 4.4% of GDP in 2004, compared with 5.4% in 2003, remaining above Maastricht targets.

 
 
GDP
(2003):
$12.7 billion.
Annual real growth rate
(2003):
2.0%.
Per capita GDP income
(2003):
$17,644
Agriculture and natural resources
(4.6% of GDP):
Products --potatoes and other vegetables, citrus fruits, olives, grapes, wheat, carob seeds.
Resources--pyrites, copper, asbestos, gypsum, lumber, salt, marble, clay, earth pigment.
Industry and construction
(19.7% of GDP):
Types --mining, cement, construction, utilities, manufacturing, chemicals, non-electric machinery, textiles, footwear, food, beverages, tobacco.


Services and tourism
(75.7% of GDP):

Trade, restaurants, and hotels 20.6%; transport 9.7%; finance, real estate, and business 21.4%; government, education, and health 15.4%; and community and other services 8.6%.
Trade
(2003):
Exports --$923 million: citrus, grapes, wine, potatoes, clothing, footwear. Major markets --EU (especially the U.K. and Greece), Middle East, Russia.
Imports
--$4.0 billion: consumer goods, raw materials for industry, petroleum and lubricants, food and feed grains. Major suppliers --Greece, Italy, Germany, U.K. (U.S. trade surplus--projected for 2003: $168 million.)


 


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