The Cypriot economy has been on a path of steady growth over the past few years and shows no signs of stopping any time soon. The country’s thriving tourism, real estate, and foreign investment sectors have helped turn it into one of the fastest-growing economies in the Eurozone. What’s more, the recent discovery of natural gas holds a lot of promise as exploitation efforts step up.
Given all that, the government is committed to using the momentum and helping the economy grow even further in 2020. Therefore, the country’s priorities for the new year include improving efficiency and boosting investor confidence.
With this in mind, here is what we can expect for Cyprus’s economy in 2020.
Cyprus has had healthy GDP growth over the past few years. The average rate of 4.4% for 2015–2018 helped the country become one of the top five performers in the Eurozone. 2019 saw a slight decrease but still had a healthy rate of 3.1%. Thanks to the growing employment rates and thriving tourism sector, the projected GDP growth for 2020 is currently 2.7%.
In less than a decade, the unprecedented surge in foreign investment, as well as the boom of the tourism and real estate sectors, helped create thousands of new jobs in Cyprus. As a result, the unemployment rate fell dramatically from 16.1% in 2014 to 6.9% in 2019. This trend is likely to continue well into 2020.
What’s more, as more and more people find employment, consumer spending in the country increases. That, in turn, boosts the real estate, retail, and hospitality industries and benefits the overall economy.
International monetary institutions and credit-rating agencies have recognized the country’s economic stability and potential for the coming years. In 2018, both Standard & Poor’s and Fitch awarded Cyprus a BBB- long-term credit rating. In addition, the IMF predicts growth rates of over 3% for 2020.
The government in Cyprus has made good use of the country’s upgraded credit rating. It issued cheaper debt with longer maturities in an attempt to improve its debt profile. For instance, in April 2019, the country issued a 30-year bond that was oversubscribed by more than 12 times. That is a clear indication that international investors see Cyprus as a stable and healthy economy.
Investment and Trade
Trade is thriving in Cyprus. While the economy is relatively small by international standards, it is very open. Besides, the government set in place a host of new incentives in 2019 that will continue well into 2020 and beyond. The aim is to attract new foreign investment, boost shipping and tourism, and encourage large-scale development and projects.
As a member of the EU, more than half of the country’s international trade in goods is within the bloc. The main imports are chemicals, vehicles, hydrocarbons, machinery, and metals such as steel and iron. The vast majority of the exports goes to Greece and the UK and includes food, pharmaceutical products, and minerals.
Inflation rates in Cyprus had been plummeting in the last few years due to high unemployment and low oil prices. 2016 saw a decline of 1.2%. However, as earnings have been rising steadily, the EU consumer price index increased by 0.7% in 2017 to 0.8% in 2018 and 0.9% in 2019. The EU Commission predicts that the trend will continue into 2020 as well, with an estimated growth of 1.1%. Average earnings in Cyprus will likely continue to rise throughout 2020.
Natural Gas Exploitation
Both the Cypriot government and international investors expect that the newfound natural gas will give a massive boost to the local economy. After an entire year of negotiations in 2019, the government and key international stakeholders came to an agreement to allow Cyprus to start producing natural gas. That will make the country an alternative supplier of gas to the EU, helping the bloc in its efforts to diversify its energy sources. Moreover, Cyprus will be able also to provide gas to countries in the Eastern Mediterranean.
As a result, the natural gas industry is expected to generate an annual income of $520 million on average for the Cypriot economy for at least 18 years, which is the estimated lifespan of the newfound gas field.
All that should create many new jobs, bring in foreign investment, and foster stable growth, benefiting the country’s economy for many years to come.
Cyprus Investment Program
The Cyprus Investment program recently underwent some changes in 2019. Nevertheless, it remains an attractive and competitive alternative for anyone looking to make a sound real estate investment and obtain a second passport. The thriving luxury real estate market is expected to keep growing in 2020. Besides, the country has a lot more to offer, including flexible tax policy and a booming job market as well as excellent education, travel, and lifestyle opportunities.
2020 is looking more than promising for all aspects of the Cypriot economy. The tourism, real estate, education, services, and hospitality industries are booming, and the newfound natural gas resources hold a lot of promise for the country. Given all that, 2020 is a great time to become part of the Cyprus Investment Program and get a new passport while making a high return on your investment.
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