2020 Cyprus Country Report

Economy
Real
GDP
Growth
Source: European
Commission,
European
Economic Forecast,
Summer 2020
GDP in
€ Billions
Source: Cystat
19.4
19.8
19.4
18.0
17.4
17.8
18.9
20.0
21.1
21.9
4.1% 3.2% -7.7% 5.3%
2018 2019 2020
(forecast)
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
GDP per
capita in €
Source: Cystat
23,402
23,273
22,502
20,877
20,421
21,031
22,163
23,315
24,294
24,925
2021
(forecast)
ographic location at the crossroads of three continents.
Administrative services are also rising fast,
boosted by the growing compliance industry. As
in many advanced countries, the largest single
sector is wholesale and retail trade, serving the
general population as well as incoming tourists.
CHALLENGES AND OPPORTUNITIES
The immediate challenge for the economy is to
limit the impact of the Covid-19 pandemic. By
September 2020 the government had committed
€1.3 billion (6.4% of GDP) to businesses, mainly
to support salaries and another €1.9 billion in
liquidity support to the banking sector. The
country will also be eligible for €479 million of the
EU’s Support to mitigate Unemployment Risks
in an Emergency (SURE) programme and €968
million from the EU’s Recovery and Resilience
Facility, while the European Central Bank (ECB)
is also providing support via the Public Sector
Purchase Programme (PSPP) and the Pandemic
Emergency Purchase Programme (PEPP).
Dealing with the short-term crisis has not distracted
the government from pursuing structural
reforms. A new Deputy Ministry of Research,
Innovation and Digital Policy was established in
March 2020 and was key to accelerating digitisation
of the public sector at the height of the pandemic.
The government approved the Fast Track
Business Activation Mechanism for non-EU nationals
in September 2020, building on the Fast
Track Headquartering scheme introduced in
2019.
Key prospects lie in energy, interconnectivity,
tourism and headquartering. Energy prospects
arise from offshore natural gas finds, further
electricity liberalisation and investment in renewables,
while opportunities for interconnectivity
will come from the submarine electricity
cables that will link Cyprus to the European and
African continents. Investment in expanding and
upgrading the island’s tourism offering will continue,
while prospects for headquartering have
been boosted by the government’s early public
health interventions to rapidly contain the pandemic.
This has further enhanced the country’s
reputation as a safe eurozone location in which
to do business. n
Country Report CYPRUS 2020 21