Editing Economy of Cyprus (section)

==Economy in the government-controlled area==
Cyprus has an [[open economy|open]], [[market economy|free-market]], [[service economy|service-based]] economy with some light manufacturing. Internationally, Cyprus promotes its geographical location as a "bridge" between [[Eastern world|East]] and West, along with its educated English-speaking population, moderate local costs, good airline connections, and telecommunications.

Since gaining independence from the United Kingdom in 1960, Cyprus has had a record of successful economic performance, reflected in strong growth, full employment conditions and relative stability. The underdeveloped agrarian economy inherited from colonial rule has been transformed into a modern economy, with dynamic services, industrial and agricultural sectors and an advanced physical and social infrastructure. The Cypriots are among the most prosperous people in the [[Mediterranean Sea|Mediterranean]] region, with GDP per capita in 2024 surpassing $38,000 in nominal terms and $62,000 on the basis of [[purchasing power parity]].<ref name="WEO database">{{cite web |title=World Economic Outlook Database, April 2025 |url=https://www.imf.org/en/Publications/WEO/weo-database/2025/april/weo-report?c=423,&s=NGDP_RPCH,NGDPD,PPPGDP,NGDPDPC,PPPPC,PCPIPCH,LUR,LP,&sy=2024&ey=2026&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1 |publisher=International Monetary Fund |access-date=22 April 2025 |location=Washington, D.C. |date=22 April 2025}}</ref>

Their [[standard of living]] is reflected in the country's "very high" [[Human Development Index]], by which it ranks 29th out of 191 countries in the world.<ref>{{cite web |date=8 September 2022 |title=Specific country data {{!}} Human Development Reports |url=https://hdr.undp.org/data-center/specific-country-data#/countries/CYP |access-date=27 January 2024 |website=United Nations Development Reports |publisher=[[United Nations Development Programme]]}}</ref>

However, after more than three decades of unbroken growth, the Cypriot economy contracted in 2009.<ref>{{cite web |title=Report for Selected Countries and Subjects |url=https://www.imf.org/en/Publications/WEO/weo-database/2023/October/weo-report?c=423,&s=NGDP_RPCH,&sy=1980&ey=2024&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1 |publisher=International Monetary Fund |access-date=18 October 2023 |location=Washington, D.C. |date=5 October 2023}}</ref> This reflected the exposure of Cyprus to the [[Great Recession]] and [[European debt crisis]]. Furthermore, Cyprus was dealt a severe blow by the [[Evangelos Florakis Naval Base explosion]] in July 2011, with the cost to the economy estimated at €1–3&nbsp;billion, or up to 17% of GDP.<ref>{{cite news|last=Kambas|first=Michele|title=Cyprus too slow in making cuts|url=http://www.cyprus-mail.com/cyprus/cyprus-too-slow-making-cuts/20110730|access-date=30 July 2011|newspaper=[[Cyprus Mail]]|date=30 July 2011|location=Nicosia|url-status=dead|archive-url=https://web.archive.org/web/20110901030437/http://www.cyprus-mail.com/cyprus/cyprus-too-slow-making-cuts/20110730|archive-date=1 September 2011}}</ref>

The economic achievements of Cyprus during the preceding decades have been significant, bearing in mind the severe economic and social dislocation created by the [[Turkish invasion of Cyprus|Turkish invasion]] of 1974 and the continuing occupation of the northern part of the island by [[Turkey]]. The Turkish invasion inflicted a serious blow to the Cyprus economy and in particular to agriculture, [[Tourism in Cyprus|tourism]], [[Mining industry of Cyprus|mining]] and [[Quarry]]ing: 70 percent of the island's wealth-producing resources were lost, the tourist industry lost 65 percent of its hotels and tourist accommodation, the industrial sector lost 46 percent, and mining and quarrying lost 56 percent of production. The loss of the port of [[Famagusta]], which handled 83 percent of the general cargo, and the closure of [[Nicosia International Airport]], in the [[United Nations Buffer Zone in Cyprus|buffer zone]], were additional setbacks.

The success of Cyprus in the economic sphere has been attributed, ''inter alia'', to the adoption of a market-oriented economic system, the pursuance of sound macroeconomic policies by the government as well as the existence of a dynamic and flexible entrepreneurship and a highly educated labor force. Moreover, the economy benefited from the close cooperation between the public and private sectors.

In the past 30 years, the economy has shifted from agriculture to light manufacturing and services. The services sector, including tourism, contributes almost 80% to GDP and employs more than 70% of the labor force. Industry and construction account for approximately one-fifth of GDP and labor, while agriculture is responsible for 2.1% of GDP and 8.5% of the labor force. Potatoes and citrus are the principal export crops. After robust growth rates in the 1980s (average annual growth was 6.1%), economic performance in the 1990s was mixed: real GDP growth was 9.7% in 1992, 1.7% in 1993, 6.0% in 1994, 6.0% in 1995, 1.9% in 1996 and 2.3% in 1997. This pattern underlined the economy's vulnerability to swings in tourist arrivals (i.e., to economic and political conditions in Cyprus, Western Europe, and the Middle East) and the need to diversify the economy. Declining competitiveness in tourism and especially in manufacturing are expected to act as a drag on growth until structural changes are effected. Overvaluation of the Cypriot pound prior to the adoption of the euro in 2008 had kept inflation in check.

Trade is vital to the Cypriot economy — the island is not self-sufficient in food and until the recent [[Aphrodite gas field|offshore gas discoveries]] had few known natural resources – and the trade deficit continues to grow. Cyprus must import fuels, most raw materials, heavy machinery, and transportation equipment. More than 50% of its trade is with the rest of the [[European Union]], especially [[Greece]] and the United Kingdom, while the Middle East receives 20% of exports. In 1991, Cyprus introduced a [[value-added tax]] (VAT), which is at 19% as of 13 January 2014. Cyprus ratified the new world trade agreement ([[General Agreement on Tariffs and Trade]], GATT) in 1995 and began implementing it fully on 1 January 1996. European Union accession negotiations started on 31 March 1998, and concluded when Cyprus joined the European Union as a full member in 2004.

===Investment climate===
The Cyprus [[legal system]] is founded on [[English law]], and is therefore familiar to most [[international financiers]]. Cyprus's legislation was aligned with EU norms in the period leading up to [[EU accession]] in 2004. Restrictions on foreign direct investment were removed, permitting 100% foreign ownership in many cases. Foreign portfolio investment in the [[Cyprus Stock Exchange]] was also liberalized.<ref name="ft.com">[http://www.ft.com/intl/cms/s/0/e2899694-4eb4-11dc-85e7-0000779fd2ac.html#axzz2A6usbMmz Cyprus will continue to fight against money laundering] FT.com 20 August 2007</ref> In 2002 a modern, business-friendly tax system was put in place with a 12.5% corporate tax rate, one of the lowest in the EU. Cyprus has concluded treaties on [[double taxation]] with more than 40 countries, and, as a member of the [[Eurozone]], has no exchange restrictions. Non-residents and foreign investors may freely repatriate proceeds from investments in Cyprus.<ref name="ft.com" />