Cyprus

:See also Cypress (a common misspelling) for other meanings.

Economy

Main article: Economy of Cyprus

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Economic affairs in Cyprus are dominated by the division of the country into the southern (Greek) area controlled by the Cyprus Government and the northern Turkish Cypriot-administered area.

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The Greek Cypriot economy is prosperous but highly susceptible to external shocks. Erratic growth rates in the 1990s reflect the economy's vulnerability to swings in tourist arrivals, caused by political instability on the island and fluctuations in economic conditions in Western Europe. Economic policy in the south in the years leading up to 2005 focused on meeting the criteria for admission to the European Union. As in the Turkish sector, water shortage is a growing problem, and several desalination plants are planned.

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The Turkish Cypriot economy has about one-fifth the population and one-third the per capita GDP of the south. Because it is recognised only by Turkey, it has had much difficulty arranging foreign financing, and foreign firms have hesitated to invest there. The economy remains heavily dependent on agriculture and government service, which together employ about half of the work force. Moreover, the small, vulnerable economy has suffered because the Turkish lira is legal tender. To compensate for the economy's weakness, Turkey provides direct and indirect aid to tourism, education, industry, etc.

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