Economy of Northern Cyprus
Encyclopedia
The economy of Northern Cyprus (the Turkish Republic of Northern Cyprus—TRNC) is dominated by the services sector (69% of GDP in 2007), which includes the public sector, trade, tourism and education. Industry (light manufacturing) contributes 22% of GDP and agriculture 9%. The economy operates on a free-market basis, with a significant portion of administration costs funded by Turkey
. The TRNC uses the Turkish Lira
as its currency, which links its economic situation to the Turkish economy.
Because of its international status and the embargo on its ports, the TRNC is heavily dependent on Turkish military and economic support. All TRNC exports and imports have to take place via Turkey, unless they are produced locally, from materials sourced in the area (or imported via one of the island's recognised ports) when they may be exported via one of the legal ports.
The continuing Cyprus problem adversely affects the economic development of the TRNC. The Republic of Cyprus, as the internationally recognised authority, has declared airports and ports in the area not under its effective control, closed. All UN and EU member countries respect the closure of those ports and airports according to the declaration of the Republic of Cyprus. The Turkish community argues that the Republic of Cyprus has used its international standing to handicap economic relations between TRNC and the rest of the world.
Despite the constraints imposed by the lack of international recognition, the TRNC economy turned in an impressive performance in the last few years. The nominal GDP growth rates of the TRNC economy in 2001-2005 were 5.4%, 6.9%, 11.4%, 15.4% and 10.6%, respectively. The real GDP growth rate in 2007 is estimated at 2%. This growth has been buoyed by the relative stability of the Turkish Lira and a boom in the education and construction sectors.
Between 2002 and 2007, Gross National Product per capita more than tripled (in current US dollars):
Studies by the World Bank show that the per capita GDP in TRNC grew to 76% of the per capita GDP in the Republic of Cyprus in PPP-adjusted terms in 2004 (US$22,300 for the Republic of Cyprus and US$16,900 for the TRNC). Official estimates for the GDP per capita in current US dollars are US$8,095 in 2004 and US$11,837 in 2006.
Although the TRNC economy has developed in recent years, it is still dependent on monetary transfers from the Turkish government. Under a July 2006 agreement, Ankara is to provide Northern Cyprus with an economic aid in the amount of $1.3 billion over three years (2006–2008). This is a continuation of ongoing policy under which Turkish government allocates around $400 million annually from its budget to help raise the living standards of the Turkish Cypriots.
The number of tourists visiting the TRNC during January–August 2006 was 380,000, up from 286,901 during January–August 2003.
The number of tourist beds increased to 17000 in 2011. Tourism revenue in 2011 was USD400 million. The number of tourists visiting Northern Cyprus: January–August 2003: 286,901; January–August 2006: 380,000,; 2010: 437,723
The Banking sector grew 114% from 2006 to 2011.TRNC Development Bank is a member of Association of Development Financing Institutions in Asia and the Pacific (ADFIAP).
Turkey
Turkey , known officially as the Republic of Turkey , is a Eurasian country located in Western Asia and in East Thrace in Southeastern Europe...
. The TRNC uses the Turkish Lira
Turkish lira
The Turkish lira is the currency of Turkey and the de facto independent state of the Turkish Republic of Northern Cyprus. The lira is subdivided into 100 kuruş...
as its currency, which links its economic situation to the Turkish economy.
Because of its international status and the embargo on its ports, the TRNC is heavily dependent on Turkish military and economic support. All TRNC exports and imports have to take place via Turkey, unless they are produced locally, from materials sourced in the area (or imported via one of the island's recognised ports) when they may be exported via one of the legal ports.
The continuing Cyprus problem adversely affects the economic development of the TRNC. The Republic of Cyprus, as the internationally recognised authority, has declared airports and ports in the area not under its effective control, closed. All UN and EU member countries respect the closure of those ports and airports according to the declaration of the Republic of Cyprus. The Turkish community argues that the Republic of Cyprus has used its international standing to handicap economic relations between TRNC and the rest of the world.
Despite the constraints imposed by the lack of international recognition, the TRNC economy turned in an impressive performance in the last few years. The nominal GDP growth rates of the TRNC economy in 2001-2005 were 5.4%, 6.9%, 11.4%, 15.4% and 10.6%, respectively. The real GDP growth rate in 2007 is estimated at 2%. This growth has been buoyed by the relative stability of the Turkish Lira and a boom in the education and construction sectors.
Between 2002 and 2007, Gross National Product per capita more than tripled (in current US dollars):
- US$4,409 (2002)
- US$5,949 (2003)
- US$8,095 (2004)
- US$10,567 (2005)
- US$11,837 (2006)
- US$14,047 (2007, provisional)
Studies by the World Bank show that the per capita GDP in TRNC grew to 76% of the per capita GDP in the Republic of Cyprus in PPP-adjusted terms in 2004 (US$22,300 for the Republic of Cyprus and US$16,900 for the TRNC). Official estimates for the GDP per capita in current US dollars are US$8,095 in 2004 and US$11,837 in 2006.
Although the TRNC economy has developed in recent years, it is still dependent on monetary transfers from the Turkish government. Under a July 2006 agreement, Ankara is to provide Northern Cyprus with an economic aid in the amount of $1.3 billion over three years (2006–2008). This is a continuation of ongoing policy under which Turkish government allocates around $400 million annually from its budget to help raise the living standards of the Turkish Cypriots.
The number of tourists visiting the TRNC during January–August 2006 was 380,000, up from 286,901 during January–August 2003.
The number of tourist beds increased to 17000 in 2011. Tourism revenue in 2011 was USD400 million. The number of tourists visiting Northern Cyprus: January–August 2003: 286,901; January–August 2006: 380,000,; 2010: 437,723
The Banking sector grew 114% from 2006 to 2011.TRNC Development Bank is a member of Association of Development Financing Institutions in Asia and the Pacific (ADFIAP).