Up until the 1960s, the economy of Cyprus was largely agricultural. However, by 1980, the economy had been transformed, with manufacturing responsible for 20% of GDP.
But, despite the diversification of the Cypriot economy in recent years, it’s now technically in a recession. As a result, the government needs to invest in industries to help the economy grow once more.
Here are three industries that can revitalise the Cypriot economy in 2021 and beyond.
#1 eCommerce and Online Services
In the 21st century, eCommerce sites and online service providers have revolutionised the way that we shop. Now, grocery shopping is often done online, items on Amazon can be ordered for next-day delivery and subscription services like Netflix have even changed the way we watch TV.
For this reason, throughout 2020, many traders and investors have either directly bought stocks in these companies or have participated in stock trading by speculating on their price movements. The mechanism through which they do this is a derivate known as contracts for difference (CFD trading).
No matter which form of investment people have chosen, the results have been staggering. This is because both Amazon and Netflix have provided investors with huge returns this year.
Overall, Amazon’s stock price has rallied by over 70% in 2020 and now the company is valued at $1.6 trillion. Similarly, Netflix stocks have seen a 64% year-to-date gain.
In Cyprus specifically, over 79% of the population now use the internet, but only 31% of Cypriots made online purchases in 2019 according to the latest data. As a result, web-based trading remains a relatively small industry in Cyprus, but this means the sector is prime for growth.
Currently, BestBuyCyprus remains one of the leading online retailers in the country, rivalling Amazon.
In 2021, expect businesses to embrace eCommerce after seeing Amazon’s successes this year. After all, businesses across the world are increasingly realising eCommerce can help them attract new customers, enter business in new markets and cut costs.
Manufacturing now accounts for over 5% of Cyprus’ GDP. But, although the manufacturing industry is already a key driver of the Cypriot economy, its impact is only set to increase over the next decade, with experts believing that manufacturing could account for 15% of the economy by 2030.
As Cyprus has one of the EU’s lowest tax rates at 12.5%, it’s an attractive base for manufacturers in Europe, the Middle East and Asia.
Now the government has put incentives in place for investments and has provided state funding for research-oriented products. So, expect huge investments in the manufacturing sector in 2021.
#3 Information and Communications Technology (ICT)
The Cypriot government believes that ICT could be incredibly useful for increasing productivity and fuelling economic growth in the country. As a result, the government is investing huge sums of money in tech start-ups as part of the 2019-2023 national strategy on Research and Innovation known as ‘Innovate Cyprus’.
The fintech market in particular is vibrant in Cyprus, with cloud solutions particularly gaining traction. Recently, Cyta, epic, Primetel and Cablenet all began to offer cloud computing services.
After showcasing their successes, expect other businesses to harness the power of the cloud and for services and software to become a top-performing sector of the country’s IT market.
Although 2020 has been a tough year for the Cypriot economy, there are plenty of reasons why investors and business owners should be optimistic for 2021 and beyond.
All three of the industries mentioned above are primed for growth and their emergence should cause economic diversification. This will not only strengthen the economy, but it will also help make it recession-proof for years to come.