Cyprus is losing more ground to major economies, dropping seven places to 40 among 64 countries on the 2022 IMD World Competitiveness Ranking index.
The island dropped three spots on last year’s board, falling to 33 from 30, and the trend has continued downwards.
According to the University of Cyprus Economics Research Centre, an IMD World Competitiveness Centre partner, the ranking is down to a significant deterioration in economic performance.
The country recorded the largest drop in the sector among all 63 participants. Cyprus plunged 25 places from 13 to 38 for its economic performance.
The drop in the 2022 ranking was derived from the worst rating received by Cyprus in the subcategories of the domestic economy, reduced investment flows and rising inflation.
In addition, criteria related to international trade (current account deficit, deteriorating trade conditions, limited exports of goods) burdened the country’s position.
Cyprus’ performance improved marginally in terms of government efficiency and infrastructure.
For government efficiency, Cyprus moved up a spot to 24th place.
Its position has improved in the subcategories of state finances (government deficit reduction) and the distribution of wealth.
On the contrary, the evaluation of Cyprus deteriorated in 2022 in the subcategories of fiscal policy, the institutional framework, and the legislative framework of enterprises, such as laws for the employment of foreign labour and access to capital markets.
The Economics Research Centre said: “This year’s decline is largely due to the reduced domestic and international investments, increased inflation, current account deficit and deteriorating trade conditions”.
More generally, the position of Cyprus is burdened by the following factors:
(a) low business efficiency due to weaknesses related to digital transformation application, changing market conditions, corporate social responsibility and attracting talented employees
(b) insufficient scientific and technological infrastructure
(c) reduced efficiency of the state due to mainly shortcomings in the institutional framework
The IMD World Competitiveness Ranking assesses how a country promotes the prosperity of its people by measuring economic well-being through hard data and survey responses from executives.
Noting the Cypriot economy has bitten the bullet from the war in Ukraine and the COVID-19 pandemic, it said a number of chronic weaknesses had taken their toll.
“Chronic weaknesses which are treatable with reforms that speed up the digitalisation process, enhance the technological and scientific infrastructure and improve the institutional framework, improve competitiveness, making the economy more resilient to crises.”