Business Monitor International

Cyprus Business Forecast Report

Published 20 October 2014

  • 37 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
Cyprus Business Forecast Report

Core Views

  • Cyprus is past the worst of its brutal recession. Nonetheless, we do not forecast annual economic expansion until 2016, as credit growth remains impaired, public austerity deepens, and the internal devaluation process keeps a lid on nominal and real wages.

  • Although the Cypriot government's fiscal consolidation plan has begun to bear fruit , with a reduced deficit, a budget surplus is unlikely to be posted anytime soon. With slow economic growth ahead and chronic budget deficits, Cyprus's debt sustainability may again be called into question at some point in the next few years.

  • Talks to reunify the island have regained some momentum in the past year. While both sides of the dispute still appear to be far apart on the terms of any potential settlement, we believe that negotiations on the 40-year-old 'Cyprus problem' are reaching a crucial phase.

Major Forecast Change

  • We have raised our 2015 real GDP growth forecast to 0.0% from -0.2%.

Key Risks To Outlook

  • Given the sharp decline in major categories of expenditure, particularly fixed investment, there is the potential for a stronger rebound than we are currently pencilling in over the next two years. We reiterate, however, that the economy and the components of expenditure are likely to remain well below their peaks in real terms for several years to come.

Macroeconomic Forecasts (Cyprus 2012-2015)
Indicator 2012 2013 2014f 2015f
Real GDP growth, % y-o-y -2.4 -5.4 -3.4 0.0
Nominal GDP, EURbn 17.9 16.5 16.0 16.1
Consumer price inflation, % y-o-y, eop 3.1 0.4 0.1 1.0
Exchange rate EUR/USD, eop 0.81 0.75 0.79 0.83
Budget balance, % of GDP -6.3 -5.4 -4.7 -3.1
Current account balance, % of GDP -6.8 -1.9 -1.6 -1.0

Click here to explore data

Table of Contents

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Hydrocarbons Raise Stakes For Peace Talks
Long-Term Political Outlook
Cyprus Problem, Economy The Dominant Issues
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
Slow Recovery Ahead, But The Worst Is Past
TABLE: GDP Contribution To Growth
Balance Of Payments
External Rebalancing To Continue
TABLE: Current Account
Fiscal Policy
Government Debt Load To Peak In 2015
TABLE: Fiscal Policy
Regional Monetary Policy
ECB Easing: Signs Of Growing Anxiety
Chapter 3: 10-Year Forecast
The Cypriot Economy To 2023
Long Road To Recovery
TABLE: Long-Term Macroeconomic Forecasts
Chapter 4: Operational Risk
Operational Risk Index
Operational Risk
Table: Developed States - Labour Market Risk
Table: Developed States - Logistics Risk
Table: Developed States - Crime And Security Risks
Table: Developed States - Trade And Investment Risk
Chapter 5: BMI Global Assumptions
Global Outlook
Big Emerging Market Revisions
Table: Global Assumptions
Table : Developed States , Real GDP Growt H, %
Table : Emerging Mar kets , Real GDP Growth , %

The Cyprus Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Cyprus and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of Cyprus's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Cyprus's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Cyprus's country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in Cyprus, including currency volatility, the commodity price boom and protectionist policies.

The Cyprus Business Forecast Report by Business Monitor International (BMI) includes three major sections: Economic Outlook, Political Outlook and Business Environment.

Economic Outlook:

How will the Cypriot economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Cyprus through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Cyprus Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:


  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Cyprus and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Cyprus, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Cyprus over the next 5-years?

BMI's Cyprus country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Cypriot Market - Political Strengths, Weaknesses, Opportunities and Threats facing Cyprus.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for Cyprus's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Cyprus's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for Cyprus, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of Cyprus's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

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The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express