ΙCT sector contributed €3 bln to economy

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The technology sector’s (ICT) contribution to the Cypriot economy is estimated to reach €3 bln this year, boosting its diversification and resilience.

According to the latest data, more than 1,200 foreign companies, mainly in technology, began operations in Cyprus through the Ministry of Commerce’s Business Facilitation Unit.

At the same time, 9,800 job permits have been issued to specialised foreign personnel, which boosted investments and domestic consumption and, consequently, GDP growth.

The strong growth in the ICT sector has been acknowledged by the European Commission, which has upgraded its projection for GDP growth this year by 2.4% to 5.6%.

“This is due to higher-than-expected growth in the second quarter of the year, the better-than-expected performance of tourism, as well as the impact of the expanding ICT sector,” the Commission said in its latest post-programme surveillance report.

In statements to CNA, Evgenios Evgeniou, Chair of the Cyprus Investment Promotion Agency (Invest Cyprus), highlighted the importance of the ICT sector to diversifying the country’s growth model and reducing the trade deficit.

The ICT sector’s contribution is estimated to amount close to €3 bln this year, marking an annual increase of 58% compared to €1.9 bln in 2021.

Although the ICT sector includes local telecommunication companies, the increase of over €1 bln, amid growing uncertainty due to the war in Ukraine, is largely attributed to the attraction of big tech companies and specialised staff to Cyprus.

Cyprus implemented a plan to attract foreign technology companies and talent, involving an incentives scheme tabled by the Ministry of Finance, implemented by Invest Cyprus and other government departments.

“This performance is nothing but the fruit of a collective effort and action by the government, the parliament, the public and the private sector,” Evgeniou said.

Even though economic challenges will continue in 2023, “we are optimistic that the interest by international companies of high specialisation to relocate in Cyprus will continue unabated.”

According to data by Invest Cyprus, so far, more than 35 large foreign corporations have shown interest in relocating their headquarters, with the majority of letters of intent for investments in Cyprus coming from multinational corporations, some of which have already invested on the island, while other investments are in the pipeline.

These investments positively impacted other sectors of the economy, such as education, health, accommodation, investment funds, asset management, energy, start-ups and real estate.

The Ministry of Commerce Facilitation Unit has assisted more than 1,200 foreign companies to begin operations in Cyprus, while data by the Migration Department show that a total of 9,800 job permits have been granted to specialised personnel, and 8,100 family members have relocated.

It is no coincidence that the Greenfield FDI Performance Index has shown that Cyprus was among the Top 10 countries concerning the recovery of investments following the pandemic, with 150% growth in the first half of 2022 compared to 2019, while investments in the technology sector have spiked by an annual 600%.