Economy of Northern Cyprus

Last updated

Economy of Northern Cyprus
Night at Yenisehir, Nicosia.jpg
North Nicosia is the economic center of Northern Cyprus
Currency Turkish lira () (TRY)
Calendar year
Trade organisations
ECO (observer)
Statistics
GDP Increase2.svg $4.234 billion (nominal, 2018) [1]
GDP rank 157th (nominal, if ranked according to the World Bank)
GDP growth
Increase2.svg 5.0% (2018) [1]
GDP per capita
$14,942 (Nominal, 2018) [1]
Increase2.svg 10.2% (2018) [1]
UnemploymentDecrease Positive.svg 5% (2018) [1]
Main industries
tourism, education, agriculture
External
ExportsIncrease2.svg $131 million (2014) [2]
Export goods
Dairy products, raw and processed citrus, rakı, scrap, chicken, potatoes
Main export partners
Flag of Turkey.svg  Turkey, Flag of the Arab League.svg Arab League countries [3]
ImportsIncrease2.svg$1.816 billion dollars [4]
Main import partners
Flag of Turkey.svg  Turkey, Flag of Europe.svg  European Union

All values, unless otherwise stated, are in US dollars.

The economy of Northern Cyprus is dominated by the services sector (69% of GDP in 2007), which includes the public sector, trade, tourism and education. Industry (light manufacturing) contributes 22% of GDP and agriculture 9%. [5] Northern Cyprus's economy operates on a free-market basis, with a significant portion of administration costs funded by Turkey. Northern Cyprus uses the Turkish lira as its currency, which links its economic situation to the economy of Turkey.

Contents

As of 2014, the GDP per capita of Northern Cyprus was $15,109, and the GDP was $4.039 billion. The economy grew by 4.9% in 2014 and 2.8% in 2013, meaning that Northern Cyprus is growing faster than the Republic of Cyprus. [6] [7] Northern Cyprus has seen economic growth and declining unemployment throughout the 2010s; the unemployment rate in 2015 was at 7.4%, [8] down from 8.3% in 2014. [9] The inflation rate in June 2015 was at 3.18%. [10] [9] [11]

Embargo, debt and Turkey's role

Because of its international status and the embargo on its ports, the TRNC is heavily dependent on Turkish military and economic support. [12] All TRNC exports and imports have to take place via Turkey, unless they are produced locally, from materials sourced in the area (or imported via one of the island's recognised ports) when they may be exported via one of the legal ports.

The continuing Cyprus problem adversely affects the economic development of the TRNC. The Republic of Cyprus, as the internationally recognised authority, has declared airports and ports in the area not under its effective control, closed. All UN and EU member countries respect the closure of those ports and airports according to the declaration of the Republic of Cyprus. The Turkish community argues that the Republic of Cyprus has used its international standing to handicap economic relations between TRNC and the rest of the world. [13] [14]

There are three-year-long programs of financial and economical cooperation between Turkey and Northern Cyprus. [15] In 2013, Turkey transferred 430 million Turkish liras to the Turkish Cypriot budget, comprising 5.7% of the GNP, and one-seventh of the state budget. The aid from Turkey had decreased from 7.1% of the budget in 2004. In addition, 2013 saw a budget deficit amounting to 7.2% of the GNP, and a credit amounting to 6.6% of the GNP was obtained from Turkey. Between 2004 and 2013, Northern Cyprus constantly had a budget deficit, peaking at 14.0% of the GNP in 2009. This prompted constant borrowing from Turkey, reaching a maximum of 12.2% of the GNP in 2009. [16] In December 2014, Northern Cyprus had a total debt of 23 million Turkish liras, 7.5 million liras being external debt to Turkey. This amounted to 1.5 times the GDP. [17]

Economic growth

The Ministry of Finance of Northern Cyprus TRNC Ministry of Finance.jpg
The Ministry of Finance of Northern Cyprus

Despite the constraints imposed by the lack of international recognition, the TRNC economy turned in an impressive performance. The nominal GDP growth rates of the TRNC economy in 2001-2005 were 5.4%, 6.9%, 11.4%, 15.4% and 10.6%, respectively. [18] [19] The real GDP growth rate in 2007 is estimated at 2%. [5] This growth has been buoyed by the relative stability of the Turkish Lira and a boom in the education and construction sectors.

The growth was further buoyed by the arrival of North European Home Buyers, investing in holiday villas. Over 10,000 British people, including expatriates purchased holiday villas there to live in permanently, or to visit during the summer months. These settlers generated over $1 Billion between 2003 and 2007.

Between 2002 and 2007, Gross National Product per capita more than tripled (in current US dollars): [20]

Studies by the World Bank show that the per capita GDP in TRNC grew to 76% of the per capita GDP in the Republic of Cyprus in PPP-adjusted terms in 2004 (US$22,300 for the Republic of Cyprus and US$16,900 for the TRNC). [18] [19] Official estimates for the GDP per capita in current US dollars are US$8,095 in 2004 and US$11,837 in 2006. [20]

Development

Lemons in Northern Cyprus. Citrus is the good that Northern Cyprus exports the most. Lemons North Cyprus.jpg
Lemons in Northern Cyprus. Citrus is the good that Northern Cyprus exports the most.
A luxurious hotel in the Bafra Tourism Area, developed in the 2010s. Noah's Ark Hotel in Bafra, Northern Cyprus view.jpg
A luxurious hotel in the Bafra Tourism Area, developed in the 2010s.
Headquarters of the Limassol Turkish Cooperative Bank in North Nicosia, the economic hub. LTK Bank Headquarters North Nicosia.jpg
Headquarters of the Limassol Turkish Cooperative Bank in North Nicosia, the economic hub.

Although the TRNC economy has developed in recent years, it is still dependent on monetary transfers from the Turkish government. Under a July 2006 agreement, Ankara is to provide Northern Cyprus with an economic aid in the amount of $1.3 billion over three years (2006–2008). [5] This is a continuation of ongoing policy under which Turkish government allocates around $400 million annually from its budget to help raise the living standards of the Turkish Cypriots. [21] [22] [23]

Tourism

The tourism sector of Northern Cyprus has seen high levels of constant growth. 1.23 million tourists visited Northern Cyprus in 2013, 920,000 of these being from Turkey. The number of tourists had doubled since 2006, which saw 570,000 tourists. The revenue from tourism was at $616 million, up from $390 million in 2009 and $288 million in 2004. [11]

The number of tourist beds increased to 17,000 in 2011. [24]

Banking

The Banking sector grew 114% from 2006 to 2011. [24] TRNC Development Bank is a member of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP). [25]

Exports and imports

WTO statistically counts products from Northern Cyprus as products from Turkey. [26]

In 2014, the exports of Northern Cyprus were at $130 million, with an increase of 11.9% from 2013, and the imports were at $1.51 billion, with an increase of 3.6% from 2013. The main trading partner is Turkey, as of 2014, 64.7% of Turkish Cypriot imports are from and 58.5% of Turkish Cypriot exports are to Turkey. Middle Eastern countries are the destination of 30.3% of Turkish Cypriot exports and their share in the exports of Northern Cyprus has greatly increased, being at only 17.8% at 2006. The share of exports to the European Union has greatly decreased from 15.0% in 2006 to 6.2% in 2014, while imports from the European Union were 15.5% of all imports. [2]

The agricultural sector is the source of the vast majority of exported goods. In 2013, 32.4% of exported products were raw agricultural products and 50.8% were processed agricultural products. 8.7% of the exports was minerals, 3.0% clothing and 5.1% other industrial products. Raw citrus by itself constituted 19.1% of all exports. [27] The most important exported products, in order of the revenue they produce, are dairy products, citrus, rakı, scrap, citrus concentrate, chicken and potatoes. [28]

Below is a table showing the distribution of exports of Northern Cyprus by goods:

Distribution of TRNC exports by goods (US dollar) [29]
2007200820092010
Citrus 22,692,32420,502,08613,910,93427,166,238
Dairy products 20,650,39421,628,85220,074,23925,836,381
Rakı 4,482,4066,653,8218,413,6317,669,936
Scrap 8,141,6537,283,6644,237,8316,477,316
Ready-made clothing 6,790,0203,727,2642,326,9004,022,957
Citrus concentrate3,192,255662,9391,746,9223,007,110
Gypsum 1,894,9243,927,0302,490,9251,889,140
Pharmaceuticals 955,6931,009,966649,4651,573,599
Leather products1,269,816908,411594,751461,562
Other products8,975,7446,354,0909,002,18812,579,609
Exports to the Republic of Cyprus4,639,58411,006,0157,615,9785,746,061
Total83,684,81383,664,13871,063,76696,419,909

Related Research Articles

<span class="mw-page-title-main">Economy of Chad</span>

The economy of Chad suffers from the landlocked country's geographic remoteness, drought, lack of infrastructure, and political turmoil. About 85% of the population depends on agriculture, including the herding of livestock. Of Africa's Francophone countries, Chad benefited least from the 50% devaluation of their currencies in January 1994. Financial aid from the World Bank, the African Development Bank, and other sources is directed largely at the improvement of agriculture, especially livestock production. Because of lack of financing, the development of oil fields near Doba, originally due to finish in 2000, was delayed until 2003. It was finally developed and is now operated by ExxonMobil. In terms of gross domestic product, Chad ranks 147th globally with $11.051 billion as of 2018.

<span class="mw-page-title-main">Economy of Cyprus</span>

The economy of Cyprus is a high-income economy as classified by the World Bank, and was included by the International Monetary Fund in its list of advanced economies in 2001. Cyprus adopted the euro as its official currency on 1 January 2008, replacing the Cypriot pound at an irrevocable fixed exchange rate of CYP 0.585274 per €1.

<span class="mw-page-title-main">Economy of Grenada</span>

The economy of Grenada is largely tourism-based, small, and open economy. Over the past two decades, the main thrust of Grenada's economy has shifted from agriculture to services, with tourism serving as the leading foreign currency earning sector. The country's principal export crops are the spices nutmeg and mace. Other crops for export include cocoa, citrus fruits, bananas, cloves, and cinnamon. Manufacturing industries in Grenada operate mostly on a small scale, including production of beverages and other foodstuffs, textiles, and the assembly of electronic components for export.

<span class="mw-page-title-main">Gross domestic product</span> Market value of goods and services produced within a country

Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period by a country or countries. GDP is more often used by the government of a single country to measure its economic health. Due to its complex and subjective nature, this measure is often revised before being considered a reliable indicator.

<span class="mw-page-title-main">Economy of Lebanon</span>

The economy of Lebanon has been experiencing a large-scale multi-dimensional crisis since 2019, including a banking collapse, a liquidity crisis and a sovereign default. It is classified as a developing, lower-middle-income economy. The nominal GDP was estimated at $19 billion in 2020, with a per capita GDP amounting to $2,500. In 2018 government spending amounted to $15.9 billion, or 23% of GDP.

<span class="mw-page-title-main">Economy of Martinique</span>

The economy of Martinique is mostly based in the services sector. Agriculture accounts for about 6% of Martinique's GDP and the small industrial sector for 11%. Sugar production has declined, with most of the sugarcane now used for the production of rum. Banana exports are increasing, going mostly to France. The bulk of meat, vegetable, and grain requirements must be imported, contributing to a chronic trade deficit that requires large annual transfers of aid from France. Tourism has become more important than agricultural exports as a source of foreign exchange. The majority of the work force is employed in the service sector and in administration.

The economy of Samoa is dependent on agricultural exports, development aid and private financing from overseas. The country is vulnerable to devastating storms, earthquakes, tsunamis. Agriculture employs two-thirds of the labor force, and furnishes 9% of exports, featuring coconut cream, coconut oil and copra. Outside a large automotive wire harness factory, the manufacturing sector mainly processes agricultural products. Tourism is an expanding sector; more than 70,000 tourists visited the islands in 1996 and 120,000 in 2014. The Samoan Government has called for deregulation of the financial sector, encouragement of investment, and continued fiscal discipline. Observers point to the flexibility of the labor market as a basic strength factor for future economic advances.

<span class="mw-page-title-main">Economy of Senegal</span>

The economy of Senegal is driven by mining, construction, tourism, fishing and agriculture, which are the main sources of employment in rural areas, despite abundant natural resources in iron, zircon, gas, gold, phosphates, and numerous oil discoveries recently. Senegal's economy gains most of its foreign exchange from fish, phosphates, groundnuts, tourism, and services. As one of the dominant parts of the economy, the agricultural sector of Senegal is highly vulnerable to environmental conditions, such as variations in rainfall and climate change, and changes in world commodity prices.

<span class="mw-page-title-main">Economy of Seychelles</span>

The economy of Seychelles is based on fishing, tourism, processing of coconuts and vanilla, coir rope, boat building, printing, furniture and beverages. Agricultural products include cinnamon, sweet potatoes, cassava (tapioca), bananas, poultry and tuna.

<span class="mw-page-title-main">Economy of Syria</span>

Syria's economic situation has been turbulent and their economy has deteriorated considerably since the beginning of the Syrian civil war, which erupted in March 2011.

<span class="mw-page-title-main">Economy of Turkey</span>

Turkey is a founding member of the OECD and G20. The country's economy ranked as the 17th-largest in the world and 7th-largest in Europe by nominal GDP in 2023. It also ranked as the 11th-largest in the world and 5th-largest in Europe by PPP in 2023. According to the IMF, as of 2022, Turkey had an upper-middle income, mixed-market, emerging economy. Turkey has often been defined as a newly industrialized country since the turn of the 21st century. The country is the fourth most visited destination in the world, and has over 1,500 R&D centres established both by multinational and national firms. Turkey is among the world's leading producers of agricultural products, textiles, motor vehicles, transportation equipment, construction materials, consumer electronics, and home appliances.

<span class="mw-page-title-main">Economy of the Comoros</span>

The economy of the Comoros is based on subsistence agriculture and fishing. Comoros has inadequate transportation links, a young and rapidly increasing population, and few natural resources. The low educational level of the labor force contributes to a subsistence level of economic activity, high unemployment, and a heavy dependence on foreign grants and technical assistance. The Comoros, with an estimated gross domestic product (GDP) per capita income of about $700, is among the world's poorest and least developed nations. Although the quality of the land differs from island to island, most of the widespread lava-encrusted soil formations are unsuited to agriculture. As a result, most of the inhabitants make their living from subsistence agriculture and fishing. Average wages in 2007 hover around $3–4 per day.

<span class="mw-page-title-main">Northern Cyprus</span> State on the island of Cyprus, only recognised by Turkey

Northern Cyprus, officially the Turkish Republic of Northern Cyprus (TRNC), is a de facto state that comprises the northeastern portion of the island of Cyprus. It is recognised only by Turkey, and its territory is considered by all other states to be part of the Republic of Cyprus.

The economic history of the Republic of Turkey had four eras or periods. The first era had the development policy emphasizing private accumulation between 1923 and 1929. The second era had the development policy emphasized state accumulation in a period of global crises between 1929 and 1945. The third era was state-guided industrialization based on import-substituting protectionism between 1950 and 1980. The final, era was the opening of the economy to liberal trade in goods, services and financial market transactions since 1981.

<span class="mw-page-title-main">Economy of the Republic of Ireland</span>

The economy of the Republic of Ireland is a highly developed knowledge economy, focused on services in high-tech, life sciences, financial services and agribusiness, including agrifood. Ireland is an open economy, and ranks first for high-value foreign direct investment (FDI) flows. In the global GDP per capita tables, Ireland ranks 2nd of 192 in the IMF table and 4th of 187 in the World Bank ranking.

<span class="mw-page-title-main">Economy of Algeria</span>

Algeria's economy continued to recover in the first half of 2022, led by a return of oil production to pre-pandemic levels and a continued recovery of the service sector along with a more vigorous agricultural activity. The recovery should continue into 2023, supported by the nonhydrocarbon sector and public expenditure growth, according to the latest edition of the World Bank's Algeria Economic Update.

The economy of Guam depends mainly on US military spending and on tourist revenue. Over the past 20 years, the tourist industry grew rapidly, creating a construction boom for new hotels, golf courses and other tourist amenities. More than 1.1 million tourists visit Guam each year including about 1,000,000 from Japan and 150,000 from Korea. Setbacks in the 1990s include numerous super-typhoons, a M7.8 earthquake, and a Korean airline crash.

<span class="mw-page-title-main">Central Bank of the Turkish Republic of Northern Cyprus</span> Central Bank

The Central Bank of the Turkish Republic of Northern Cyprus, is the central bank of Northern Cyprus. It was established on 16 May 1983. Northern Cyprus uses the Turkish lira as currency and the main central banking functions are provided by the Central Bank of the Republic of Turkey.

<span class="mw-page-title-main">History of the Jews in Northern Cyprus</span>

The history of the Jews in Northern Cyprus is related to the history of the Jews in Cyprus, history of the Jews in Turkey, and the history of the Jews in Greece.

The Turkish economic boom of the 2000s refers to a period of stabilization and growth following the 2001 Turkish economic crisis. Between 2002 and 2007, Turkey's economy experienced an average growth rate of 7.2%, much higher than the average growth rate during the nineties. The Turkish economy saw relative prosperity for the duration of the Global financial crisis of 2008 and continued to see growth rates of 8.8% in 2010, and 9.2% and 2011.

References

  1. 1 2 3 4 5 "KKTC" (PDF). www.kei.gov.tr. 2018. Archived from the original (PDF) on 2020-10-07. Retrieved 2020-05-26.
  2. 1 2 "KKTC Merkez Bankası 2014 IV. Çeyrek Raporu" (PDF) (in Turkish). TRNC Central Bank. pp. 9–10. Retrieved 29 July 2015.
  3. "Stats" (PDF). ticaret.gov.ct.tr. Retrieved 2020-05-26.
  4. "Ocak" (PDF). ticaret.gov.ct.tr. 2018. Retrieved 2020-05-26.
  5. 1 2 3 CIA - The World Factbook - Cyprus: scroll down to section entitled Economy of the area administered by Turkish Cypriots
  6. "KKTC" (in Turkish). Turkish Ministry of Economy. Retrieved 28 July 2015.
  7. "Political deal may boost Cypriot economy". Daily Sabah. Retrieved 28 July 2015.
  8. "KKTC'de işsizlik %7.4". Kıbrıs. Retrieved 6 June 2016.
  9. 1 2 "En yüksek işsizlik oranı Güzelyurt'ta" (in Turkish). Kıbrıs Postası. Retrieved 29 July 2015.
  10. "2008=100 TEMEL YILI TÜKETİCİ FİYATLARI ENDEKSİNİN 2015 HAZİRAN AYI SONUÇLARI" (PDF). State Planning Organization. Archived from the original (PDF) on 24 February 2016. Retrieved 29 July 2015.
  11. 1 2 Economic and Social Indicators 2013. TRNC State Planning Organization. pp. 2–3.
  12. "Universities: Little accord on the island - Higher, Education - The Independent". Archived from the original on 2008-01-11. Retrieved 2008-12-29.
  13. "Foreign aid fungibility and military spending: The case of North Cyprus". Defence and Peace Economics. 25: 499–508. doi:10.1080/10242694.2013.763628.
  14. "The Impact of Military Spending on Economic Growth: The Case of North Cyprus". Defence and Peace Economics. 22: 555–562. doi:10.1080/10242694.2011.562370.
  15. "Türkiye'den KKTC'ye 2015'in ilk üç ayında ne kadar yardım gitti?" (in Turkish). T24. Retrieved 28 July 2015.
  16. Economic and Social Indicators 2013. TRNC State Planning Organization. pp. 21–23.
  17. "Maliye Bakanı Mungan bütçeyi sundu" (in Turkish). Yeni Düzen. 8 December 2014. Retrieved 28 July 2015.
  18. 1 2 Cyprus after Accession: Thinking Outside the Box – Background Documents, University of Oxford, European Studies Centre, Workshop on Cyprus 10–11 March 2006
  19. 1 2 General information about North Cyprus: Economy, web site of Unistar Investments Ltd., Bellapais, North Cyprus
  20. 1 2 Economic and Social Indicators 1977-2007 Archived 2013-11-08 at the Wayback Machine , TRNC State Planning Organization, February 2008
  21. Turkey, N. Cyprus sign economic development deal Archived 2009-01-25 at the Wayback Machine , Hurriyet Turkish Daily News, 4 May 2007.
  22. Feridun, Mete (2014) Foreign aid fungibility and military spending: the case of North Cyprus. Defence and Peace Economics, 25 (5). pp. 499-508. ISSN 1024-2694 (Print), 1476-8267 (Online) (doi:10.1080/10242694.2013.763628)
  23. Feridun, Mete, Sawhney, Bansi and Shahbaz, Muhammad (2011) The impact of military spending on economic growth: the case of North Cyprus. Defence and Peace Economics, 22 (5). pp. 555-562. ISSN 1024-2694 (print), 1476-8267 (online) (doi:10.1080/10242694.2011.562370)
  24. 1 2 Zaman Newspaper 01 Sept 2011 Archived November 7, 2013, at the Wayback Machine
  25. ADFIAP Archived 2021-01-19 at the Wayback Machine Northern Cyprus DB is a member
  26. "Moving Borders: Russia's Creative Entry into the World Trade Organization (WTO)". Daniel Warner, Alternatives: Global, Local, Political, 2014, Vol. 39(2) 90-107, page105. Retrieved 25 March 2020.
  27. Economic and Social Indicators 2013. TRNC State Planning Organization. p. 27.
  28. "Dış Ticaret" (in Turkish). Turkish Ministry of Economy. Retrieved 29 July 2015.
  29. TRNC Ministry of Economy and Energy, Department of Trade. Dış Ticaret İthalat ve İhracat İstatistikleri 2010, p. VI.