Cyprus Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Cyprus Country Risk Report
Product Price
$1,195.00

Core Views

  • Cyprus has emerged from a prolonged recession. Regardless, the economy will continue to be challenged by a weak external environment, public sector austerity, competitive pressures on wages and disposable income, and high levels of non-performing loans in the banking sector.

  • Negotiations between Greek and Turkish Cypriots on the 40-year-old 'Cyprus problem' are reaching a crucial phase. The odds of a deal to reunify the island are higher now than they have been since the last major peace effort ended in 2004, though parliamentary opposition poses a threat.

  • The Cypriot government has exited its 2013 EU/IMF bailout, but the series of structural and fiscal reforms put in place under the programme have put the country in a position to boost private sector activity and reduce the public debt overhang substantially over the next decade.

Major Forecast Change s

  • We have revised up our forecast for real GDP growth in 2016 to 2.5% from 1.9% as a result of strong economic data in the beginning of the year, combined with very positive leading indicators.

  • We have revised up our projection for the Cypriot current account deficit in 2017 to 4.9% of GDP from 3.7% previously, on account of weaker services growth due to an anticipated slowdown in tourist arrivals from the UK.

Key Risks

  • Cyprus' status as a small, open economy leaves it vulnerable to external risks, particularly from key trading partners Russia and Greece, which are each experiencing severe difficulties.

  • The UK's referendum vote to leave the European Union could hurt British investment into Cyprus, as well as depress Cypriot tourism revenues.

  • Given the sharp decline in major categories of expenditure, particularly fixed investment, the recent gains in international competitiveness may prove unsustainable.

Macroeconomic Forecasts (Cyprus 2014-2017)
Indicator 2014 2015 2016f 2017f
BMI/Eurostat
Real GDP growth, % y-o-y -2.5 1.6 2.5 2.5
Nominal GDP, EURbn 17.4 17.4 18.0 18.5
Consumer price inflation, % y-o-y, eop -0.3 -1.5 -1.0 0.2
Exchange rate EUR/USD, eop 0.80 0.90 0.90 0.90
Budget balance, % of GDP -0.2 -0.5 0.0 0.0
Current account balance, % of GDP -4.6 -3.6 -4.1 -4.9
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
From Laggard To Leader, But Headwinds To Persist
8
GDP By Expenditure Outlook
10
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
External Trade And Investment Outlook
11
Tourism To Take A Hit From Brexit
11
TABLE: FIXED INVESTMENT FORECASTS
11
TABLE: NET EXPORTS FORECASTS
11
Outlook On External Position
13
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
13
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
13
TABLE: TOP 5 GOODS IMPORTS
14
TABLE: TOP 5 GOODS EXPORTS
14
Fiscal Policy And Public Debt Outlook
15
Solid Fiscal Position, But Risks Rising
15
Structural Fiscal Position
16
TABLE: GENERAL GOVERNMENT EXPENDITURE AND REVENUE BREAKDOWN
16
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
16
Regional Monetary Policy
18
TABLE: NEGATIVE INTEREST RATES - SUMMARY
21
Regional Growth Outlook
23
Brexit Contagion Could Reignite Eurozone Crisis
23
Chapter 2: 10-Year Forecast
27
The Cyprus Economy To 2025
27
Long Road To Recovery
27
TABLE: LONG-TERM MACROECONOMIC FORECASTS
27
Chapter 3: Political Outlook
29
SWOT Analysis
29
BMI Political Risk Index
29
Domestic Politics
30
Parliamentary Divide Threatens Peace Deal And Reforms
30
TABLE: DOMESTIC POLITICS
30
Long-Term Political Outlook
32
Cyprus Problem, Economy The Dominant Issues
32
Chapter 4: Operational Risk
35
SWOT Analysis
35
Operational Risk Index
35
Operational Risk
36
Labour Market Risk
36
TABLE: DEVELOPED STATES - LABOUR MARKET RISK
36
Logistics Risk
39
TABLE: DEVELOPED STATES - LOGISTICS RISK
40
Crime And Security Risk
42
TABLE: DEVELOPED STATES - CRIME AND SECURITY RISK
43
Trade And Investment Risk
44
TABLE: DEVELOPED STATES - TRADE AND INVESTMENT RISK
45
Chapter 5:BMI Global Macro Outlook
47
Global Macro Outlook
47
Brexit Risk Casts A Long Shadow
47
TABLE: GLOBAL ASSUMPTIONS
47
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
48
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
49
TABLE: MACROECONOMIC DATA & FORECASTS
51

Assess your risk exposure in Cyprus with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Cyprus with confidence.

Your subscription service includes:

  • Delivery of the report in print and PDF
  • Online access for 12 months
  • The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
  • The ability to export data and graphs from the online report directly into your workflow
  • The support of a dedicated Account Manager to answer any questions you might have about your subscription
  • Access to our team of leading analysts who will be happy to answer any questions you might have about the data and forecasts included in this report