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12° Nicosia,
22 July, 2024
 

Cyprus slips in global competitiveness rankings for third consecutive year

Deterioration in economic performance, government efficiency, and business practices contributed to decline

Newsroom / CNA

Cyprus has experienced a decline in its global competitiveness for the third consecutive year, dropping from the 40th position to the 45th out of 64 countries in the IMD World Competitiveness Center rankings. This marks Cyprus' lowest position since its participation in the rankings, according to the University of Cyprus' Economic Research Centre (ERC).

The deterioration in competitiveness can be attributed to a decline in all four aspects evaluated: economic performance, government efficiency, business efficiency, and infrastructure. Cyprus' economic performance has been negatively impacted by reduced foreign direct investment flows, a deficit in the current account balance, worsening terms of trade, and limited goods exports. The institutional framework has also hindered government efficiency, with weaknesses in capital cost, transparency, and bureaucracy. Additionally, deficiencies in basic and technological infrastructure have further contributed to the decline.

Business efficiency is identified as the most burdensome factor in this year's ranking, largely due to weaknesses in administrative practices and the implementation of digital transformation in enterprises.

The ERC emphasizes the need for timely reforms and investments in infrastructure and human capital that align with the requirements of a modern economy to address Cyprus' weaknesses. The persistent deficiencies that have hindered competitiveness in previous years have been significantly amplified by external disruptions, such as the Russia-Ukraine conflict, sanctions against Russia, economic slowdown, and uncertainty.

According to the 2023 Opinion Survey, the top five factors that make the Cypriot economy attractive are the competitive tax regime, business-friendly environment, high level of education, skilled workforce, and positive attitudes of the people.

In terms of economic performance, Cyprus ranks 47th among the evaluated countries, dropping nine positions compared to the previous year. This decline is primarily attributed to a significant deterioration in international investments in Cyprus and, to a lesser extent, worsened performance in the subcategories of international trade and employment.

However, there have been positive implications for Cyprus in the assessment of its domestic economy in 2023. Strong performance in criteria such as tourist revenues, foreign investment reserves, and service exports has somewhat mitigated the country's descent in the rankings.

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