Financial Crime World

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Cyprus’ Economic Outlook Clouded by Uncertainty

Despite its reputation as a popular destination for foreign direct investment, Cyprus is facing significant challenges that are likely to impact the country’s economic growth in the coming years.

  • Abolition of citizenship-by-investment programme
  • Supply disruptions and high construction material prices due to COVID-19 and sanctions on Russia
  • Ongoing bureaucracy and red tape in other sectors

The war in Ukraine and sanctions against Russia have also taken a toll on Cyprus’ economy, with growth forecast to slow down this year. To mitigate the negative impact, the government has announced plans to focus on reducing the economic burden of these external factors.

UK-Cyprus Ties Remain Strong

Despite the challenges ahead, Cyprus remains an attractive destination for British businesses due to:

  • Similarities in legal and accounting systems
  • Engineering standards
  • Widespread use of the English language

The UK is one of Cyprus’ top export markets, with British products and services well-established on the island.

Recovery and Resilience Plan Offers Opportunities

Cyprus’ Recovery and Resilience Plan (RRP) aims to support investment and accelerate structural reforms needed to boost economic growth. The plan is based on three pillars:

  • Green transition
  • Digital transition
  • Economic and social resilience

Various projects resulting from the RRP have already created opportunities for UK companies in these sectors.

Economic Freedom Index Ranks Cyprus 23rd

According to the 2022 Economic Freedom Index, Cyprus ranks 23rd globally with a score of 72.9, above regional and world averages. This ranking reflects the country’s relatively low bureaucracy and efficient legal framework.

Challenges Remain in Labour and Human Rights

While Cyprus’ labour laws allow for collective bargaining agreements and union formation, delays in legal procedures and a backlog in court cases can hinder business operations. Additionally:

  • Corruption remains a concern
  • Transparency International’s Corruption Perception Index ranks Cyprus 52nd out of 180 countries in 2021

Bribery and Corruption Remain Illegal

  • Bribery is illegal in both Cyprus and the UK
  • Companies are advised to ensure compliance with anti-corruption laws

The government has implemented measures to tackle corruption, including a new anti-corruption agency.

Terrorism Threat Remains

The general threat from terrorism remains, and visitors should be aware of potential attacks in public places.

Protective Security Advice Available

For more information on protective security advice and tips for staying safe while traveling or doing business in Cyprus, please visit our website.

Intellectual Property Protection

Cyprus is a signatory to various international treaties and follows the latest intellectual property laws. Independent registration of trademarks is available through the Department of Registrar of Companies and Official Receiver.

Organised Crime a Concern

International organised criminal activity, including drug trafficking and people smuggling, remains a concern in Cyprus. The government has taken action to address these issues, and the UK and Cyprus cooperate closely on this matter.

For more information on business opportunities in Cyprus or advice on doing business with the country, please contact the Department for Business and Trade (DBT) team in Cyprus.