Economy of Northern Cyprus

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The economy of Northern Cyprus (the Turkish Republic of Northern Cyprus—TRNC) 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%.[1] The economy operates on a free-market basis, with a significant portion of administration costs funded by Turkey. The TRNC uses the Turkish Lira as its currency, which links its economic situation to the Turkish economy.

Turkey role[edit]

Because of its international status and the embargo on its ports, the TRNC is heavily dependent on Turkish military and economic support.[2] 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.

Economic growth[edit]

Despite the constraints imposed by the lack of international recognition, the TRNC economy turned in an impressive performance in the last few years. 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.[3][4] The real GDP growth rate in 2007 is estimated at 2%.[1] 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 Expatriats 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):[5]

  • US$4,409 (2002)
  • US$5,949 (2003)
  • US$8,095 (2004)
  • US$10,567 (2005)
  • US$11,837 (2006)
  • US$14,047 (2007, provisional)

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).[3][4] Official estimates for the GDP per capita in current US dollars are US$8,095 in 2004 and US$11,837 in 2006.[5]

Development[edit]

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).[1] 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.[6]

Tourism[edit]

The number of tourists visiting the TRNC during January–August 2006 was 380,000,[4] up from 286,901 during January–August 2003.[7]

The number of tourist beds increased to 17000 in 2011. Tourism revenue in 2011 was USD400 million.[8] The number of tourists visiting Northern Cyprus: January–August 2003: 286,901;[7] January–August 2006: 380,000,;[4] 2010: 437,723[9]

Banking[edit]

The Banking sector grew 114% from 2006 to 2011.[10]TRNC Development Bank is a member of Association of Development Financing Institutions in Asia and the Pacific (ADFIAP).[11]

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

Distribution of TRNC exports by goods (US dollar)[12]
2007 2008 2009 2010
Citrus 22,692,324 20,502,086 13,910,934 27,166,238
Dairy products 20,650,394 21,628,852 20,074,239 25,836,381
Rakı 4,482,406 6,653,821 8,413,631 7,669,936
Scrap 8,141,653 7,283,664 4,237,831 6,477,316
Ready-made clothing 6,790,020 3,727,264 2,326,900 4,022,957
Citrus concentrate 3,192,255 662,939 1,746,922 3,007,110
Gypsum 1,894,924 3,927,030 2,490,925 1,889,140
Pharmaceuticals 955,693 1,009,966 649,465 1,573,599
Leather products 1,269,816 908,411 594,751 461,562
Other products 8,975,744 6,354,090 9,002,188 12,579,609
Exports to the Republic of Cyprus 4,639,584 11,006,015 7,615,978 5,746,061
Total 83,684,813 83,664,138 71,063,766 96,419,909

References[edit]

  1. ^ a b c CIA - The World Factbook - Cyprus: scroll down to section entitled Economy of the area administered by Turkish Cypriots
  2. ^ Universities: Little accord on the island - Higher, Education - The Independent
  3. ^ a b Cyprus after Accession: Thinking Outside the Box – Background Documents, University of Oxford, European Studies Centre, Workshop on Cyprus 10–11 March 2006
  4. ^ a b c d General information about North Cyprus: Economy, web site of Unistar Investments Ltd., Bellapais, North Cyprus
  5. ^ a b Economic and Social Indicators 1977-2007, TRNC State Planning Organization, February 2008
  6. ^ Turkey, N. Cyprus sign economic development deal, Hurriyet Turkish Daily News, 4 May 2007.
  7. ^ a b Tourism statistics for the period January-August 2003: North Cyprus Ministry of Economy and Tourism
  8. ^ Zaman Newspaper 01 Sept 2011
  9. ^ Number of tourists visiting North Cyprus Year 2010: 437,723
  10. ^ Zaman Newspaper 01 Sept 2011
  11. ^ ADFIAP Northern Cyprus DB is a member
  12. ^ TRNC Ministry of Economy and Energy, Department of Trade. Dış Ticaret İthalat ve İhracat İstatistikleri 2010, p. VI.