Economic overview Cyprus, in 36 editions.

These data are for the area controlled by the Republic of Cyprus (information on the northern Turkish-Cypriot area is sparse). The economy is small, diversified, and prosperous. Industry contributes about 28% 25% to GDP and employs 35% of the labor force, while the service sector contributes about 55% to GDP and employs 40% of the labor force. Rapid growth in exports of agricultural and manufactured products and in tourism have played important roles in the average 6% rise in GDP in recent years. While this growth put considerable pressure on prices and the balance of payments, the inflation rate has remained low and the balance-of-payments deficit manageable.

The Greek Cypriot economy is small, diversified, and prosperous. Industry
contributes 24% 16.5% to GDP and employs 35% 29% of the labor force, while the service
service sector contributes 44% 62% to GDP and employs 45% 57% of the labor force. Rapid
Rapid growth in exports of agricultural and manufactured products and in tourism
tourism have played important roles in the average 6.4% 6.8% rise in GDP between 1985 and
1986 and 1990. In This progress was temporarily checked in 1991, because of the
adverse effects of the Gulf War on tourism. Nevertheless in mid-1991, the
World Bank "graduated" Cyprus off its list of
developing countries. In
contrast to the bright picture in the south, the
Turkish Cypriot economy has
less than half the per capita GDP and suffered a
series of reverses in 1991.
Crippled by the effects of the Gulf war, the
collapse of the
fruit-to-electronics conglomerate, Polly Peck, Ltd., and a
drought, the
Turkish area in late 1991 asked for a multibillion-dollar grant
from Turkey
to help ease the burden of the economic crisis. In addition, the Turkish
government extended a $100 million loan in November 1992 to be used for
economic development projects in 1993. Turkey normally
underwrites a
substantial portion of the TRNC Turkish Cypriot economy.

The Greek Cypriot economy is small, diversified, and prosperous. Industry
Industry contributes 16.5% 16% to GDP and employs 29% of the labor force,
while the
service sector contributes 62% 60% to GDP and employs 57% of the
labor force.
Rapid growth in exports of agricultural and manufactured products and in
tourism have played important roles in the An average 6.8% rise in real GDP between
1986 and 1990. This progress 1990
was temporarily checked in 1991, because of the
adverse effects of the
Gulf War on tourism. Nevertheless Economic growth surged again in mid-1991, 1992, bolstered
by strong foreign and domestic demand. As the economy gained momentum,
World Bank "graduated" Cyprus off its list of developing countries. In however, it began to overheat; inflation reached 6.5%. The economy has
contrast likely recorded a sharp drop in growth in 1993, due to the bright picture recession
in the south, the Western Europe, Cyprus' main trading partner, but probably will
pick up again in 1994. The Turkish Cypriot economy has
less than half
one-third the per capita GDP and suffered a series of reverses in 1991. the south. Because it is recognized
Crippled only by the effects of the Gulf war, the collapse of the Turkey, it has had much difficulty arranging foreign
fruit-to-electronics conglomerate, Polly Peck, Ltd., financing, and a drought, the foreign firms have hesitated to invest there. The
Turkish area in late 1991 asked for a multibillion-dollar grant from Turkey economy remains heavily dependent on agriculture, which employs more
to help ease the burden than one-quarter of the economic crisis. In addition, workforce. Moreover, because the Turkish lira
government extended a $100 million loan in November 1992 to be used is legal tender, the Turkish Cypriot economy has suffered the same
high inflation as mainland Turkey. To compensate for the economy's
economic development projects in 1993. weakness, Turkey normally underwrites a provides direct and indirect aid to nearly every
substantial portion sector; financial support has reached about one-third of the Turkish
Cypriot economy. GDP.

The Greek Cypriot economy is small, diversified, and prosperous.
prosperous. Industry contributes 16% 14% to GDP and employs 29% of the
labor force,
while the service sector contributes 60% 53% to GDP and
employs 57% of the
labor force. An average 6.8% rise in real GDP
between 1986 and 1990
was temporarily checked in 1991, because of the
adverse effects of the
Gulf War war on tourism. Economic growth surged again After surging 8.5% in 1992, bolstered
by strong foreign and domestic demand. As the economy gained momentum,
however, it began 1992, growth slowed to overheat; inflation reached 6.5%. The economy has
likely recorded a sharp drop 2.0% in growth 1993 - its lowest level in 1993, due to two decades
- because of the recession decline in tourist arrivals associated with the
recession in Western Europe, Cyprus' main trading partner, but probably will and the
pick loss in export competitiveness due to a sharp rise in unit labor
costs. Real GDP is likely to have picked up again in 1994. 1994, and inflation is
estimated to have risen to between 5% and 6%. The Turkish Cypriot
economy has less than
one-third the per capita GDP in of the south.
Because it is recognized
only by Turkey, it has had much difficulty
arranging foreign
financing, and foreign firms have hesitated to
invest there. The
economy remains heavily dependent on agriculture,
which employs more
than one-quarter of the workforce. work force. Moreover, because the
Turkish lira
is legal tender, the Turkish Cypriot economy has suffered
the same
high inflation as mainland Turkey. The small, vulnerable
economy is estimated to have experienced a sharp drop in growth during
1994 because of the severe economic crisis affecting the mainland. To
compensate for the economy's
weakness, Turkey provides direct and
indirect aid to nearly every
sector; financial support has reached risen in
value to about one-third of Turkish
Cypriot GDP.

The Greek Cypriot economy is small, diversified, small and
prosperous. prosperous, but highly susceptible to external shocks. Industry
contributes 14% 25% to GDP and employs 29% 26% of the
labor force, while the
service sector contributes 53% 70% to GDP and
employs 57% 62% of the labor force. An average 6.8% rise in real GDP
between 1986 and 1990 was temporarily checked in 1991, because of the
adverse effects of the Gulf war on tourism. force. After surging 8.5% 9.7% in
1992, economic growth slowed to 2.0% 1.6% in
1993 - its lowest level in two decades
- because of the decline in
tourist arrivals associated with the
recession in Western Europe,
Cyprus' main trading partner, and the
loss in export competitiveness
due to a sharp rise in unit labor
costs. Real However, real GDP is likely to have picked up
in 1994, 1994 and 1995, as inflation is
estimated fell from 4.7% to have risen about 3%. Economic
prospects appear favorable for 1996: real GDP is likely to grow
between 5% 3% and 6%. 4%, and inflation is likely to rise slightly to
3.5%-4.5%. The Turkish Cypriot
economy has less than one-third the
per capita GDP of the south.
Because it is recognized only by
Turkey, it has had much difficulty
arranging foreign financing, and
foreign firms have hesitated to
invest there. The economy remains
heavily dependent on agriculture,
agriculture and government service, which employs one-quarter
together employ about half of the work force. Moreover, because the small,
Turkish lira is legal tender, the Turkish Cypriot vulnerable economy has suffered
because the same high inflation as mainland Turkey. The small, vulnerable
economy Turkish lira is estimated to have experienced a sharp drop in legal
tender. Economic growth sharply dropped during
1994 because of the
severe economic crisis affecting the mainland. To mainland, and inflation soared
to 215%. To compensate for the economy's weakness, Turkey provides
direct and
indirect aid to nearly every sector; financial support
has risen and now equals in
value to about one-third of Turkish Cypriot
GDP.

The Greek Cypriot economy is small and
prosperous,
but highly susceptible to external shocks. Industry
contributes 25% 23% to
GDP and employs 26% 25% of the labor force, while the
service sector
contributes 70% 72% to GDP and employs 62% of the labor
force. After surging 9.7% in 1992, economic growth slowed to 1.6% in Erratic
1993 - its lowest level growth rates in two decades - because of the decline in 1990s reflect the economy's vulnerability to
swings in tourist arrivals associated with the recession (caused by fluctuations in Western Europe,
Cyprus' main trading partner, political and the loss in export competitiveness
due to a sharp rise in unit labor costs. However, real GDP picked up
economic conditions in 1994 Western Europe and 1995, as inflation fell from 4.7% to about 3%. Economic the Middle East) and the
prospects appear favorable need for 1996: real GDP is likely to grow structural changes in the economy. One bright spot has been
between 3% and 4%, and inflation is likely to rise slightly to the low rate of inflation. In 1996 Cyprus fully satisfied all the
3.5%-4.5%. Maastricht convergence criteria. The Turkish Cypriot economy has less
than one-third the
per capita GDP of the south. Because it is
recognized only by
Turkey, it has had much difficulty arranging
foreign financing, and
foreign firms have hesitated to invest there.
The economy remains
heavily dependent on agriculture and government
service, which
together employ about half of the work force. Moreover,
the small,
vulnerable economy has suffered because the Turkish lira is legal
legal tender. Economic growth sharply dropped during 1994 because of the
severe economic crisis affecting the mainland, and inflation soared
to 215%. To compensate for the economy's weakness, Turkey provides
provides direct and indirect aid to nearly every sector; financial support sector. In January
has risen and now equals in value about one-third of 1997, Turkey signed a $250 million economic cooperation accord with
the Turkish Cypriot
GDP. area to support tourism, education, and industry.

The Greek Cypriot economy is small and prosperous,
but highly susceptible to external shocks. Industry contributes 23% 22% to
GDP and employs 25% of the labor force, while the service sector
contributes 72% 73% to GDP and employs 62% of the labor force. Erratic
growth rates in the 1990s reflect the economy's vulnerability to
swings in tourist arrivals (caused arrivals, caused by fluctuations in political and instability on the
island and fluctuations in economic conditions in Western Europe and the Middle East) and the
need for structural changes in the economy. One bright spot has been
the low rate of inflation. In 1996 Cyprus fully satisfied all the
Maastricht convergence criteria. Europe. The
Turkish Cypriot economy has less
than about one-third the per capita GDP of the
south. Because it is
recognized only by Turkey, it has had much
difficulty arranging
foreign financing, and foreign firms have
hesitated to invest there.
The economy remains heavily dependent on
agriculture and government
service, which together employ about half
of the work force. Moreover,
the small, vulnerable economy has
suffered because the Turkish lira is
legal tender. To compensate for
the economy's weakness, Turkey
provides direct and indirect aid to
nearly every sector. In January
1997, Turkey signed a $250 million
economic cooperation accord with
the Turkish Cypriot area to support
tourism, education, and industry.

Economic affairs are dominated by the division
of the country into the southern (Greek) area controlled by the
Cyprus Government and the northern Turkish Cypriot-administered
area. The Greek Cypriot economy is small and prosperous,
prosperous but highly susceptible
to external shocks. Industry contributes 22% to
GDP and employs 25% of the labor force, while the service sector
contributes 73% to GDP and employs 62% of the labor force. Erratic
growth rates in the 1990s reflect the
economy's vulnerability to
swings in tourist arrivals, caused by
political instability on the
island and fluctuations in economic
conditions in Western Europe. The Economic policy in the south is
focused on meeting the criteria for admission to the EU. As in the
Turkish sector, water shortage is a growing problem, and several
desalination plants are planned. The Turkish Cypriot economy has
about one-fifth the population and one-third the per capita GDP of the
the south. Because it is recognized only by Turkey, it has had much
difficulty arranging foreign financing, and foreign firms have
hesitated to invest there. The economy remains heavily dependent on
agriculture and government service, which together employ about half
of the work force. Moreover, the small, vulnerable economy has
suffered because the Turkish lira is legal tender. To compensate for
the economy's weakness, Turkey provides direct and indirect aid to
nearly every sector. In January 1997, Turkey signed a $250 million
economic cooperation accord with the Turkish Cypriot area to support
sector, e.g. tourism, education, and industry.

Economic affairs are dominated by the division
of the country into the southern (Greek) area controlled by the
Cyprus Government and the northern Turkish Cypriot-administered
area. The Greek Cypriot economy is prosperous but highly susceptible
to external shocks. Erratic growth rates in the 1990s reflect the
economy's vulnerability to swings in tourist arrivals, caused by
political instability on the island and fluctuations in economic
conditions in Western Europe. Economic policy in the south is
focused on meeting the criteria for admission to the EU. As in the
Turkish sector, water shortage is a growing problem, and several
desalination plants are planned. The Turkish Cypriot economy has
about one-fifth the population and one-third the per capita GDP of
the south. Because it is recognized only by Turkey, it has had much
difficulty arranging foreign financing, and foreign firms have
hesitated to invest there. The economy remains heavily dependent on
agriculture and government service, which together employ about half
of the work force. Moreover, the small, vulnerable economy has
suffered because the Turkish lira is legal tender. To compensate for
the economy's weakness, Turkey provides direct and indirect aid to
nearly every sector, e.g. tourism, education, and industry. industry, etc.

Economic affairs are dominated affected by the division of the country into the southern (Greek) area controlled by the Cyprus Government and the northern Turkish Cypriot-administered area. country. The Greek Cypriot economy is prosperous but highly susceptible to external shocks. Erratic growth rates in the 1990s reflect the economy's vulnerability to swings in tourist arrivals, caused by political instability on the island and fluctuations in economic conditions in Western Europe. Economic policy in the south is focused on meeting the criteria for admission to the EU. As in the Turkish sector, water shortage is a growing problem, and several desalination plants are planned. The Turkish Cypriot economy has about one-fifth the population and one-third the per capita GDP of the south. Because it is recognized only by Turkey, it has had much difficulty arranging foreign financing, and foreign firms have hesitated to invest there. The economy It remains heavily dependent on agriculture and government service, which together employ about half of the work force. Moreover, the small, vulnerable economy has suffered because the Turkish lira is legal tender. To compensate for the economy's weakness, Turkey provides direct and indirect aid to tourism, education, industry, etc.

Economic affairs are affected by the division of the country. The Greek Cypriot economy is prosperous but highly susceptible to external shocks. Erratic growth rates in the 1990s reflect the economy's vulnerability to swings in tourist arrivals, caused by political instability on in the island region and fluctuations in economic conditions in Western Europe. Economic policy is focused on meeting the criteria for admission to the EU. As in the Turkish sector, water shortage is shortages are a growing problem, and several perennial problem; a few desalination plants are planned. now online. The Turkish Cypriot economy has about one-fifth the population and one-third less than one-half the per capita GDP of the south. Because it is recognized only by Turkey, it has had much difficulty arranging foreign financing, and foreign firms have hesitated to invest there. It remains heavily dependent on agriculture and government service, which together employ about half of the work force. Moreover, the small, vulnerable economy has suffered because the Turkish lira is legal tender. To compensate for the economy's weakness, Turkey provides substantial direct and indirect aid to tourism, education, industry, etc.

Economic affairs are affected by the division of the country. The Greek Cypriot economy is prosperous but highly susceptible to external shocks. Erratic growth rates in over the 1990s 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. Economic policy is focused on meeting the criteria for admission to the EU. As in the Turkish sector, water shortages are a perennial problem; a few desalination plants are now online. The Turkish Cypriot economy has less than one-half 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, financing and foreign firms have hesitated to invest there. 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, Turkey provides substantial direct grants and indirect aid loans to tourism, education, industry, etc. 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 and by the arrangements under which the island joins the EU.

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. Economic policy is focused on meeting the criteria for admission to the EU. EU-driven tax reforms in 2003 have introduced fiscal imbalances, which, coupled with a sluggish tourism sector, have resulted in growing fiscal deficits. As in the Turkish sector, water shortages are a perennial problem; a few desalination plants are now online. on-line. After 10 years of drought, the country received substantial rainfall from 2001-03, 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, 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 and by the arrangements under which the island joins the EU. areas.

The Greek Cypriot economy is prosperous but highly susceptible to external shocks. Erratic The service sector, mainly tourism and financial services, dominates the economy; erratic growth rates over the past decade reflect the economy's vulnerability to swings in tourist arrivals, caused by reliance on tourism, which often fluctuates with political instability in the region and fluctuations in economic conditions in Western Europe. Economic policy is focused on meeting the criteria for admission to join the EU. EU-driven tax reforms in 2003 have introduced fiscal imbalances, which, coupled with a European Exchange Rate Mechanism (ERM2) within the next two years although sluggish tourism sector, and poor fiscal management have resulted in growing fiscal deficits. budget deficits since 2001. 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 from 2001-03, alleviating immediate concerns. The Turkish Cypriot economy has roughly one-third of the per capita GDP of the south. Because it is recognized only south, and economic growth tends to be volatile, given north Cyprus's relative isolation, bloated public sector, reliance on the Turkish lira, and small market size. The Turkish Cypriot economy grew 2.6% in 2004, fueled by Turkey, it has had much difficulty arranging foreign financing growth in the construction and investment. It remains education sectors as well as increased employment of Turkish Cypriots in the Republic of Cyprus. The Turkish Cypriots are heavily dependent on agriculture transfers from the Turkish government. Ankara provides around $300 million a year directly into the "TRNC" budget and regularly provides additional financing for large infrastructure projects. Agriculture and government service, which together employ about almost half of the work force. To compensate for the economy's weakness, Turkey provides grants and loans to support economic development. Ankara provided $200 million in 2002 force, and pledged $450 million for the 2003-05 period. Future events throughout the island will be highly influenced by potential for tourism is promising, especially with the outcome easing of negotiations on the UN-sponsored agreement to unite border restrictions with the Greek and Turkish areas. Cypriots in April 2003.

The Greek Cypriot Republic of Cyprus has a market economy is prosperous but highly susceptible to external shocks. The dominated by the service sector, mainly tourism which accounts for 76% of GDP. Tourism and financial services, dominates services are the economy; most important sectors; erratic growth rates over the past decade reflect the economy's reliance on tourism, which often fluctuates with political instability in the region and economic conditions in Western Europe. Economic policy is focused on meeting Nevertheless, the criteria to join economy grew a healthy 3.7% per year in 2004 and 2005, well above the EU average. Cyprus joined the European Exchange Rate Mechanism (ERM2) within the next two years although sluggish tourism and poor fiscal management have resulted in growing May 2005. The government has initiated an aggressive austerity program, which has cut the budget deficits since 2001. deficit to below 3% but continued fiscal discipline is necessary if Cyprus is to meet its goal of adopting the euro on 1 January 2008. As in the area administered by Turkish sector, Cypriots, water shortages are a perennial problem; a few desalination plants are now on-line. on line. After 10 years of drought, the country received substantial rainfall from 2001-03, 2001-03 alleviating immediate concerns. The Turkish Cypriot economy has roughly one-third of the per capita GDP of the south, and economic growth tends to be volatile, given north Cyprus's relative isolation, bloated public sector, reliance on the Turkish lira, and small market size. The Turkish Cypriot economy grew 2.6% 15.4% in 2004, fueled by growth in the construction and education sectors sectors, as well as increased employment of Turkish Cypriots in the Republic of Cyprus. The Turkish Cypriots are heavily dependent on transfers from the Turkish government. Government. Under the 2003-06 economic protocol, Ankara provides plans to provide around $300 $550 million a year directly into to the "TRNC" budget and regularly provides additional financing for large infrastructure projects. "TRNC." Agriculture and government service, together services, together, employ almost more than half of the work force, and the potential for tourism is promising, especially with the easing of border restrictions with the Greek Cypriots in April 2003. force.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for 76% of GDP. Tourism and financial services are the most important sectors; erratic growth rates over the past decade reflect the economy's reliance on tourism, which often fluctuates with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy in the area under government control grew a healthy 3.7% to 3.8% per year in 2004 and 2004, 2005, and 2006, well above the EU average. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005. The government has initiated an aggressive austerity program, which has cut the budget deficit to well below 3% but continued fiscal discipline 3%, and the EU is necessary if expected to invite Cyprus is to meet its goal of adopting adopt the euro as its national currency on 1 January 2008. As in the area administered by Turkish Cypriots, water shortages are a perennial problem; a few desalination plants are now on line. After 10 years of drought, the country received substantial rainfall from 2001-03 2001-04 alleviating immediate concerns. Rainfall in 2005 and 2006, however, was well below average making water rationing likely in 2007. The Turkish Cypriot economy has roughly one-third 45% of the per capita GDP of the south, and economic growth tends to be volatile, given north Cyprus's the north's relative isolation, bloated public sector, reliance on the Turkish lira, and small market size. The Turkish Cypriot economy grew 15.4% around 10.6% in 2004, 2006, fueled by growth in the construction and education sectors, as well as increased employment of Turkish Cypriots in the Republic of Cyprus. area under government control. The Turkish Cypriots are heavily dependent on transfers from the Turkish Government. Under the 2003-06 economic protocol, Ankara plans to provide directly finances around $550 million to one-third of the "TRNC." "TRNC's" budget. Aid from Turkey has reached over $400 million annually in recent years. Agriculture and services, together, employ more than half of the work force.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for 76% 78% of GDP. Tourism and Tourism, financial services services, and real estate are the most important sectors; erratic sectors. Erratic growth rates over the past decade reflect the economy's reliance on tourism, which often fluctuates with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy in the area under government control grew a healthy 3.7% to 3.8% by an average of 3.6% per year in 2004, 2005, and 2006, during the period of 2000-06, well above the EU average. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005. The government has initiated an aggressive austerity program, which has cut the budget deficit to well below 3%, 2005 and the EU is expected to invite Cyprus to adopt adopted the euro as its national currency on 1 January 2008. An aggressive austerity program in the preceding years, aimed at paving the way for the euro, helped turn a soaring fiscal deficit (6.3% in 2003) into a surplus of 1.5% in 2007. As in the area administered by Turkish Cypriots, water shortages are a perennial problem; a few desalination plants are now on line. After 10 years of drought, the country received substantial rainfall from 2001-04 alleviating immediate concerns. Rainfall in 2005 and 2006, however, was well below average average, making water rationing likely a necessity in 2007. The Turkish Cypriot economy has roughly 45% of the per capita GDP of the south, and economic growth tends to be volatile, given the north's relative isolation, bloated public sector, reliance on the Turkish lira, and small market size. The Turkish Cypriot economy grew around 10.6% in 2006, fueled by growth in the construction and education sectors, as well as increased employment of Turkish Cypriots in the area under government control. The Turkish Cypriots are heavily dependent on transfers from the Turkish Government. Ankara directly finances around one-third of the "TRNC's" budget. Aid from Turkey has reached over $400 million annually in recent years. Agriculture and services, together, employ more than half of the work force.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for 78% of GDP. Tourism, financial services, and real estate are the most important sectors. Erratic growth rates over the past decade reflect the economy's reliance on tourism, which often fluctuates with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy in the area under government control grew by an average of 3.6% per year during the period of 2000-06, has grown at a rate well above the EU average. average since 2000. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005 and adopted the euro as its national currency on 1 January 2008. An aggressive austerity program in the preceding years, aimed at paving the way for the euro, helped turn a soaring fiscal deficit (6.3% in 2003) into a surplus of 1.5% 1.2% in 2007. 2008, and reduced inflation to 5.1%. This prosperity will come under pressure in 2009, as construction and tourism slow in the face of reduced foreign demand triggered by the ongoing global financial crisis. Growth is expected to slow to less than 2%, which would be its lowest level since 2003. As in the area administered by Turkish Cypriots, water shortages are a perennial problem; a few desalination plants have been added to existing plants over the last year and are now on line. After 10 years of drought, the country received substantial rainfall from 2001-04 alleviating immediate concerns. Rainfall in 2005 and 2006, however, was 2001-04. Since then, rainfall has been well below average, making water rationing a necessity in 2007. necessity.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for 78% nearly four-fifths of GDP. Tourism, financial services, and real estate are the most important sectors. Erratic growth rates over the past decade reflect the economy's reliance on tourism, which often fluctuates with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy in the area under government control has grown at a rate well above the EU average since 2000. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005 and adopted the euro as its national currency on 1 January 2008. An aggressive austerity program in the preceding years, aimed at paving the way for the euro, helped turn a soaring fiscal deficit (6.3% in 2003) into a surplus of 1.2% in 2008, and reduced inflation to 5.1%. 4.7%. This prosperity will come came under pressure in 2009, as construction and tourism slow slowed in the face of reduced foreign demand triggered by the ongoing global financial crisis. Growth is expected to slow to less than 2%, which would be Although Cyprus lagged its lowest level since 2003. As EU peers in showing signs of stress from the area administered by Turkish Cypriots, water shortages are a perennial problem; a few desalination plants have been added to existing plants over global crisis, the last year economy tipped into recession in mid 2009 and are now contracted 1.8% for the year. In addition, the budget deficit is on line. After 10 years the rise and reached 5.7% of drought, GDP in 2010, a violation of the country received substantial rainfall from 2001-04. Since then, rainfall EU's budget deficit criteria of no more than 3% of GDP. In response to the country's deteriorating finances, Nicosia is promising to implement measures to cut the cost of the state payroll, curb tax evasion, and revamp social benefits. However, it has been well below average, making water rationing slow to act, lacking a necessity. consensus in parliament and among the social partners for its proposed measures.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for nearly four-fifths of GDP. Tourism, financial services, and real estate are the most important sectors. Erratic growth rates over the past decade reflect the economy's reliance on tourism, the profitability of which often fluctuates with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy in the area under government control has grown at a rate well above the EU average since 2000. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005 and adopted the euro as its national currency on 1 January 2008. An aggressive austerity program in the preceding years, aimed at paving the way for the euro, helped turn a soaring fiscal deficit (6.3% in 2003) into a surplus of 1.2% in 2008, and reduced inflation to 4.7%. This prosperity came under pressure in 2009, as construction and tourism slowed in the face of reduced foreign demand triggered by the ongoing global financial crisis. Although Cyprus lagged behind its EU peers in showing signs of stress from the global crisis, the economy tipped into recession in mid 2009 2009, contracting by 1.8%, and contracted 1.8% for the year. has been slow to bounce back since, posting an anemic growth rate of 0.6% in 2010. In addition, the budget deficit is on the rise and reached 5.7% 5.3% of GDP in 2010, a violation of the EU's budget deficit criteria of no more than 3% of GDP. In response to the country's deteriorating finances, Nicosia is promising to implement measures to cut the cost of the state payroll, curb tax evasion, and revamp social benefits. However, it has been slow to act, lacking a consensus in parliament and among the social partners for its proposed measures.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for nearly four-fifths of GDP. Tourism, financial services, and real estate are the most important sectors. Erratic growth rates over the past decade reflect the economy's reliance on tourism, the profitability of which often fluctuates can fluctuate with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy in the area under government control has grown at a rate well above the EU average since 2000. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005 and adopted the euro as its national currency on 1 January 2008. An aggressive austerity program in the preceding years, aimed at paving the way for the euro, helped turn a soaring fiscal deficit (6.3% in 2003) into a surplus of 1.2% in 2008, and reduced inflation to 4.7%. This prosperity came under pressure in 2009, as construction and tourism slowed in the face of reduced foreign demand triggered by the ongoing global financial crisis. Although Cyprus lagged behind its EU peers in showing signs of stress from the global crisis, the economy tipped into recession in 2009, contracting by 1.8%, 1.7%, and has been slow to bounce back since, posting an anemic growth rate in 2010-11 before contracting again by 2.3% in 2012. Serious problems surfaced in the Cypriot financial sector in early 2011 as the Greek fiscal crisis and euro zone debt crisis deepened. Cyprus's borrowing costs have risen steadily because of 0.6% its exposure to Greek debt. Two of Cyprus's biggest banks are among the largest holders of Greek bonds in 2010. In addition, Europe and have a substantial presence in Greece through bank branches and subsidiaries. Cyprus experienced numerous downgrades of its credit rating in 2012 and has been cut off from international money markets. The Cypriot economy contracted in 2012 following the budget deficit writedown of Greek bonds. A liquidity squeeze is on choking the rise financial sector and reached 5.3% the real economy as many global investors are uncertain the Cypriot economy can weather the EU crisis. The budget deficit rose to 7.4% of GDP in 2010, 2011, a violation of the EU's budget deficit criteria of - no more than 3% of GDP. In response to the country's deteriorating finances, finances and serious risk of contagion from the Greek debt crisis, Nicosia is promising to implement implemented measures to cut the cost of the state payroll, curb tax evasion, and revamp social benefits. However, it has been slow benefits, and trimmed the deficit to act, lacking a consensus 4.2% of GDP in parliament 2012. In July, Nicosia became the fifth euro zone government to request an economic bailout program from the European Commission, the European Central Bank, and among the social partners for its proposed measures. International Monetary Fund - known collectively as the "Troika". Negotiations over the final details of the plan are ongoing.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for four-fifths of GDP. Tourism, financial services, and real estate have traditionally been the most important sectors. Cyprus has been a member of the European Union (EU) since May 2004 and adopted the euro as its national currency in January 2008. During the first five years of EU membership, the Cyprus economy grew at an average rate of about 4%, with unemployment between 2004 and 2008 averaging about 3%. 4%. However, the economy tipped into recession in 2009 as the ongoing global financial crisis and resulting low demand hit the tourism and construction sectors. An overextended banking sector with excessive exposure to Greek debt resulted in a contraction in economic growth. Two of Cyprus' added to the contraction. Cyprus’s biggest two banks were among the largest holders of Greek bonds in Europe and had a substantial presence in Greece through bank branches and subsidiaries. Following numerous downgrades of its credit rating, Cyprus lost access to international capital markets in May 2011. The economy contracted by an accumulated 8.2% between 2009 and 2013 and is not expected to return to positive growth before 2015. Unemployment is currently over 17% and expected to reach 19% in 2014. In July 2012, Cyprus became the fifth eurozone government to request an economic bailout program from the European Commission, European Central Bank and the International Monetary Fund - known collectively as the "Troika". "Troika."
Shortly after the election of President Nicos Nikos ANASTASIADES in February 2013, Cyprus faced reached an economic crisis and agreed agreement with the Troika to on a $13 $10 billion bailout that included resulted in losses on uninsured bank deposits. The bailout triggered a two-week bank closure and the imposition of capital controls, some of which remained controls that were completely withdrawn in place through 2014. April 2015. Cyprus' two largest banks merged and the combined entity was recapitalized through conversion of some large bank deposits to shares and imposition of losses on some bank bondholders. The As with other EU countries, the Troika conditioned the bailout on progress in passing financial and structural reforms and privatization of privatizing state-owned enterprises. Cyprus has downsized Despite downsizing and restructured its banking restructuring, the Cypriot financial sector significantly. Three throughout 2014 remained burdened by the largest stock of non-performing loans (NPLs) in the euro-zone, equal to nearly half of all loans. Since the bailout, Cyprus has received positive reviews appraisals by the Troika since May 2013 indicate that Cyprus’ bailout program is on track with a fourth review scheduled but met its first signs of resistance to passing bailout-mandated legislation in May 2014. Political disagreements held up passage of contentious legislation required by the Troika to reform bankruptcy rules, delaying disbursal of bailout funds during the second half of the year. In October 2013, Cyprus a US-Israeli consortium completed preliminary appraisal appraisals of hydrocarbon deposits in its territorial waters, Cyprus’ exclusive economic zone (EEZ), which revealed less than anticipated natural gas reserves. Additional an estimated gross mean reserve of about 140 billion cubic meters. Though exploration continues in Cyprus’ EEZ, no additional commercially exploitable reserves were identified during the exploratory drilling in 2014/2015. Nevertheless, developing its offshore hydrocarbon resources remains a critical component to the government’s economic recovery efforts. Industry experts say there may be exploratory and development drilling in 2016 and 2017.
Economy - overview: Even though the whole of the island is likely part of the EU, implementation of the EU "acquis communautaire" has been suspended in the area administered by Turkish Cypriots, known locally as the "Turkish Republic of Northern Cyprus" ("TRNC"), until political conditions permit the reunification of the island. The market-based economy of the TRNC is roughly one-fifth the size of its southern neighbor and is likewise dominated by the service sector with a large portion of the population employed by the government. In 2012 - the latest year for which data are available - the services sector, which includes the public sector, trade, tourism, and education, contributed 58.7% to continue economic output. In the same year, light manufacturing and agriculture contributed 2.7% and 6.2%, respectively. Manufacturing is limited mainly to food and beverages, furniture and fixtures, construction materials, metal and non-metal products, textiles and clothing. The “TRNC” maintains few economic ties with the Republic of Cyprus outside of trade in 2014-2015. construction materials. Since its creation, the "TRNC" has heavily relied on financial assistance from Turkey, which supports the "TRNC" defense, telecommunications, water and postal services. The Turkish Lira is the preferred currency, though foreign currencies are widely accepted in business transactions. The "TRNC" remains vulnerable to the Turkish market and monetary policy because of its use of the Turkish Lira. The "TRNC" weathered the European financial crisis relatively unscathed - compared to the Republic of Cyprus - because of the lack of financial sector development, the health of the Turkish economy, and its separation from the rest of the island. The TRNC economy experienced growth estimated at 2.8% in 2013 and 2.3% in 2014 and is projected to grow 3.8% in 2015.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for more than four-fifths of GDP. Tourism, financial services, shipping, and real estate have traditionally been the most important sectors. Cyprus has been a member of the European Union (EU) EU since May 2004 and adopted the euro as its national currency in January 2008.
During the first five years of EU membership, the Cyprus economy grew at an average rate of about 4%, with unemployment between 2004 and 2008 averaging about 4%. However, the economy tipped into recession in 2009 as the ongoing global financial crisis and resulting low demand hit the tourism and construction sectors. An overextended banking sector with excessive exposure to Greek debt added to the contraction. Cyprus’s Cyprus’ biggest two banks were among the largest holders of Greek bonds in Europe and had a substantial presence in Greece through bank branches and subsidiaries. Following numerous downgrades of its credit rating, Cyprus lost access to international capital markets in May 2011. In July 2012, Cyprus became the fifth eurozone euro-zone government to request an economic bailout program from the European Commission, European Central Bank and the International Monetary Fund - known collectively as the "Troika."
Shortly after the election of President Nikos ANASTASIADES in February 2013, Cyprus reached an agreement with the Troika on a $10 $13 billion bailout that resulted in losses on uninsured bank deposits. The bailout triggered a two-week bank closure and the imposition of capital controls that were completely withdrawn remained partially in place until April 2015. Cyprus' two largest banks merged and the combined entity was recapitalized through conversion of some large bank deposits to shares and imposition of losses on bank bondholders. As with other EU countries, the Troika conditioned the bailout on passing financial and structural reforms and privatizing state-owned enterprises. Despite downsizing and restructuring, the Cypriot financial sector throughout 2014 2015 remained burdened by the largest stock of non-performing loans (NPLs) in the euro-zone, euro zone, equal to nearly half of all loans. Since the bailout, Cyprus has received positive appraisals by the Troika and outperformed fiscal targets but met its first signs of resistance has struggled to passing overcome political opposition to bailout-mandated legislation legislation, particularly regarding privatizations. Cyprus emerged from recession in 2014. Political disagreements held up passage of contentious legislation required by 2015 and its economy grew an estimated 1.6% for the Troika to reform bankruptcy rules, delaying disbursal of bailout funds during year, setting a positive tone for the second half scheduled end of the year. bailout program in March 2016.
In October 2013, a US-Israeli consortium completed preliminary appraisals of hydrocarbon deposits in Cyprus’ exclusive economic zone (EEZ), which revealed an estimated gross mean reserve of about 140 130 billion cubic meters. Though exploration continues in Cyprus’ EEZ, no additional commercially exploitable reserves were identified during the exploratory drilling in 2014/2015. Nevertheless, developing its Developing offshore hydrocarbon resources remains a critical component to of the government’s economic recovery efforts. Industry experts say there may be exploratory and efforts, but development drilling in 2016 has been delayed as a result of regional developments and 2017. disagreements about exploitation methods.
Economy - overview: Even though the whole of the island is part of the EU, implementation of the EU "acquis communautaire" has been suspended in the area administered by Turkish Cypriots, known locally as the "Turkish Republic of Northern Cyprus" ("TRNC"), until political conditions permit the reunification of the island. The market-based economy of the TRNC "TRNC" is roughly one-fifth the size of its southern neighbor and is likewise dominated by the service sector with a large portion of the population employed by the government. In 2012 - the latest year for which data are available - the services sector, which includes the public sector, trade, tourism, and education, contributed 58.7% to economic output. In the same year, light manufacturing and agriculture contributed 2.7% and 6.2%, respectively. Manufacturing is limited mainly to food and beverages, furniture and fixtures, construction materials, metal and non-metal products, textiles and clothing. The “TRNC” maintains few economic ties with the Republic of Cyprus outside of trade in construction materials. Since its creation, the "TRNC" has heavily relied on financial assistance from Turkey, which supports the "TRNC" defense, telecommunications, water and postal services. The Turkish Lira is the preferred currency, though foreign currencies are widely accepted in business transactions. The "TRNC" remains vulnerable to the Turkish market and monetary policy because of its use of the Turkish Lira. The "TRNC" weathered the European financial crisis relatively unscathed - compared to the Republic of Cyprus - because of the lack of financial sector development, the health of the Turkish economy, and its separation from the rest of the island. The TRNC "TRNC" economy experienced growth estimated at 2.8% in 2013 and 2.3% in 2014 and is projected to grow 3.8% in 2015.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which a services sector that accounts for more than four-fifths of GDP. Tourism, financial services, finance, shipping, and real estate have traditionally been the most important sectors. services. Cyprus has been a member of the EU since May 2004 and adopted the euro as its national currency in January 2008.
During the first five years of EU membership, the Cyprus economy grew at an average rate of about 4%, with unemployment between 2004 and 2008 averaging about 4%. However, the economy tipped into recession in 2009 as the ongoing global financial crisis and resulting low demand hit the tourism and construction sectors. An overextended banking sector with excessive exposure to Greek debt added to the contraction. Cyprus’ biggest two banks were among the largest holders of Greek bonds in Europe and had a substantial presence in Greece through bank branches and subsidiaries. Following numerous downgrades of its credit rating, Cyprus lost access to international capital markets in May 2011. In July 2012, Cyprus became the fifth euro-zone government to request an economic bailout program from the European Commission, European Central Bank and the International Monetary Fund - known collectively as the "Troika."
Shortly after the election of President Nikos ANASTASIADES in February 2013, Cyprus reached an agreement with the Troika on a $13 billion bailout that resulted in losses on uninsured bank deposits. The bailout triggered a two-week bank closure and the imposition of capital controls that remained partially in place until April 2015. Cyprus' two largest banks merged and the combined entity was recapitalized through conversion of some large bank deposits to shares and imposition of losses on bank bondholders. As with other EU countries, the Troika conditioned the bailout on passing financial and structural reforms and privatizing state-owned enterprises. Despite downsizing and restructuring, the Cypriot financial sector throughout 2015 remained burdened by the largest stock of non-performing loans in the euro zone, equal to nearly half of all loans. Since the bailout, Cyprus has received positive appraisals by the Troika and outperformed fiscal targets but has struggled to overcome political opposition to bailout-mandated legislation, particularly regarding privatizations. Cyprus emerged from recession in 2015 and its economy grew an estimated 1.6% 1.5% for the year, setting a positive tone for the scheduled end of the bailout program in March 2016. Growth recovered to 2.8% in 2016. The European Commission projects continued GDP growth in Cyprus of 2.5% in 2017 and an 11.1% reduction in unemployment, but the rate of non-performing loans (NPLs) is still very high at around 49%. If Cypriot banks can increase the pace of resolution of these NPLs, economic growth could exceed the projection.
In October 2013, a US-Israeli consortium completed preliminary appraisals of hydrocarbon deposits in Cyprus’ exclusive economic zone (EEZ), which revealed an estimated gross mean reserve reserves of about 130 billion cubic meters. Though exploration continues in Cyprus’ EEZ, no additional commercially exploitable reserves were identified during the exploratory drilling in 2014/2015. Developing offshore hydrocarbon resources remains a critical component of the government’s economic recovery efforts, but development has been delayed as a result of regional developments and disagreements about exploitation methods.
Economy - overview: Even though the whole of the island is part of the EU, implementation of the EU "acquis communautaire" has been suspended in the area administered by Turkish Cypriots, known locally as the "Turkish Republic of Northern Cyprus" ("TRNC"), until political conditions permit the reunification of the island. The market-based economy of the "TRNC" is roughly one-fifth the size of its southern neighbor and is likewise dominated by the service sector with a large portion of the population employed by the government. In 2012 - the latest year for which data are available - the services sector, which includes the public sector, trade, tourism, and education, contributed 58.7% to economic output. In the same year, light manufacturing and agriculture contributed 2.7% and 6.2%, respectively. Manufacturing is limited mainly to food and beverages, furniture and fixtures, construction materials, metal and non-metal products, textiles and clothing. The “TRNC” maintains few economic ties with the Republic of Cyprus outside of trade in construction materials. Since its creation, the "TRNC" has heavily relied on financial assistance from Turkey, which supports the "TRNC" defense, telecommunications, water and postal services. The Turkish Lira is the preferred currency, though foreign currencies are widely accepted in business transactions. The "TRNC" remains vulnerable to the Turkish market and monetary policy because of its use of the Turkish Lira. The "TRNC" weathered the European financial crisis relatively unscathed - compared to the Republic of Cyprus - because of the lack of financial sector development, the health of the Turkish economy, and its separation from the rest of the island. The "TRNC" economy experienced growth estimated at 2.8% in 2013 and 2.3% in 2014 and is projected to grow 3.8% in 2015.

The area of the Republic of Cyprus under government control has a market economy dominated by a services sector that accounts for more than four-fifths of GDP. Tourism, finance, shipping, and real estate have traditionally been the most important services. Cyprus has been a member of the EU since May 2004 and adopted the euro as its national currency in January 2008.
During the first five years of EU membership, the Cyprus economy grew at an average rate of about 4%, with unemployment between 2004 and 2008 averaging about 4%. However, the economy tipped into recession in 2009 as the ongoing global financial crisis and resulting low demand hit the tourism and construction sectors. An overextended banking sector with excessive exposure to Greek debt added to the contraction. Cyprus’ biggest two banks were among the largest holders of Greek bonds in Europe and had a substantial presence in Greece through bank branches and subsidiaries. Following numerous downgrades of its credit rating, Cyprus lost access to international capital markets in May 2011. In July 2012, Cyprus became the fifth euro-zone government to request an economic bailout program from the European Commission, European Central Bank and the International Monetary Fund - known collectively as the "Troika."
Shortly after the election of President Nikos ANASTASIADES in February 2013, Cyprus reached an agreement with the Troika on a $13 billion bailout that triggered a two-week bank closure and the imposition of capital controls that remained partially in place until April 2015. Cyprus' two largest banks merged and the combined entity was recapitalized through conversion of some large bank deposits to shares and imposition of losses on bank bondholders. As with other EU countries, the Troika conditioned the bailout on passing financial and structural reforms and privatizing state-owned enterprises. Despite downsizing and restructuring, the Cypriot financial sector throughout 2015 remained remains burdened by the largest stock of non-performing loans in the euro zone, equal to nearly half of all loans. Since the bailout, Cyprus has received positive appraisals by the Troika and outperformed fiscal targets but has struggled to overcome political opposition to bailout-mandated legislation, particularly regarding privatizations. Cyprus emerged from recession in 2015 and its economy grew an estimated 1.5% for the year, setting a positive tone for the scheduled end of the bailout program in March 2016. Growth recovered to 2.8% in 2016. The European Commission projects continued GDP growth in Cyprus of 2.5% in 2017 and an 11.1% reduction in unemployment, but the rate of non-performing loans (NPLs) is still very high at around 49%. If 49%, and growth would accelerate if Cypriot banks can could increase the pace of resolution of these NPLs, economic growth could exceed the projection.
NPLs. In October 2013, a US-Israeli consortium completed preliminary appraisals of hydrocarbon deposits in Cyprus’ exclusive economic zone (EEZ), which estimated gross mean reserves of about 130 billion cubic meters. Though exploration continues in Cyprus’ EEZ, no additional commercially exploitable reserves were identified during the exploratory drilling in 2014/2015. have been identified. Developing offshore hydrocarbon resources remains a critical component of the government’s economic recovery efforts, but development has been delayed as a result of regional developments and disagreements about exploitation methods.
Economy - overview: Even though the whole of the island is part of the EU, implementation of the EU "acquis communautaire" has been suspended in the area administered by Turkish Cypriots, known locally as the "Turkish Republic of Northern Cyprus" ("TRNC"), until political conditions permit the reunification of the island. The market-based economy of the "TRNC" is roughly one-fifth the size of its southern neighbor and is likewise dominated by the service sector with a large portion of the population employed by the government. In 2012 - the latest year for which data are available - the services sector, which includes the public sector, trade, tourism, and education, contributed 58.7% to economic output. In the same year, light manufacturing and agriculture contributed 2.7% and 6.2%, respectively. Manufacturing is limited mainly to food and beverages, furniture and fixtures, construction materials, metal and non-metal products, textiles and clothing. The “TRNC” maintains few economic ties with the Republic of Cyprus outside of trade in construction materials. Since its creation, the "TRNC" has heavily relied on financial assistance from Turkey, which supports the "TRNC" defense, telecommunications, water and postal services. The Turkish Lira is the preferred currency, though foreign currencies are widely accepted in business transactions. The "TRNC" remains vulnerable to the Turkish market and monetary policy because of its use of the Turkish Lira. The "TRNC" weathered the European financial crisis relatively unscathed - compared to the Republic of Cyprus - because of the lack of financial sector development, the health of the Turkish economy, and its separation from the rest of the island. The "TRNC" economy experienced growth estimated at 2.8% in 2013 and 2.3% in 2014 and is projected to grow 3.8% in 2015.

The area of the Republic of Cyprus under government control has a market economy dominated by a services sector that accounts for more than four-fifths of GDP. Tourism, finance, shipping, and real estate have traditionally been the most important services. Cyprus has been a member of the EU since May 2004 and adopted the euro as its national currency in January 2008.
During the first five years of EU membership, the Cyprus economy grew at an average rate of about 4%, with unemployment between 2004 and 2008 averaging about 4%. However, the economy tipped into recession in 2009 as the ongoing global financial crisis and resulting low demand hit the tourism and construction sectors. An overextended banking sector with excessive exposure to Greek debt added to the contraction. Cyprus’ biggest two banks were among the largest holders of Greek bonds in Europe and had a substantial presence in Greece through bank branches and subsidiaries. Following numerous downgrades of its credit rating, Cyprus lost access to international capital markets in May 2011. In July 2012, Cyprus became the fifth euro-zone government to request an economic bailout program from the European Commission, European Central Bank and the International Monetary Fund - known collectively as the "Troika."
Shortly after the election of President Nikos ANASTASIADES in February 2013, Cyprus reached an agreement with the Troika on a $13 billion bailout that triggered a two-week bank closure and the imposition of capital controls that remained partially in place until April 2015. Cyprus' two largest banks merged and the combined entity was recapitalized through conversion of some large bank deposits to shares and imposition of losses on bank bondholders. As with other EU countries, the Troika conditioned the bailout on passing financial and structural reforms and privatizing state-owned enterprises. Despite downsizing and restructuring, the Cypriot financial sector remains burdened by the largest stock of non-performing loans in the euro zone, equal to nearly half of all loans. Since the bailout, Cyprus has received positive appraisals by the Troika and outperformed fiscal targets but has struggled to overcome political opposition to bailout-mandated legislation, particularly regarding privatizations. The rate of non-performing loans (NPLs) is still very high at around 49%, and growth would accelerate if Cypriot banks could increase the pace of resolution of the NPLs.
In October 2013, a US-Israeli consortium completed preliminary appraisals of hydrocarbon deposits in Cyprus’ exclusive economic zone (EEZ), which estimated gross mean reserves of about 130 billion cubic meters. Though exploration continues in Cyprus’ EEZ, no additional commercially exploitable reserves have been identified. Developing offshore hydrocarbon resources remains a critical component of the government’s economic recovery efforts, but development has been delayed as a result of regional developments and disagreements about exploitation methods.