Russian business worth 12% of GDP to Cyprus?

Russian business could be worth EUR 2.1 bln per year, or 12% of GDP, according to a presentation made by Sapienta Economics Director, Fiona Mullen, at the Economist Conference in Nicosia on Friday, although there are huge differences between Cypriot and Russian figures.
Mullen said that Russians are the now the second largest tourism market, with around 200,000 visitors per year compared with around 1 million for the UK.
If both markets continue at the same pace of growth as the past ten years, which Mullen said was a “tall assumption”, Russia would overtake the UK by around 2025.
In terms of spending, Russians are already the biggest market, with expenditure of around EUR 1,000 per person compared with only EUR 650 for British visitors, who are not even in the top five.
Mullen estimated that tourism income from Russians in 2010 was around EUR 221 mln.
More difficult to determine is the figure for foreign direct investment (FDI). According to Central Bank of Cyprus figures, direct investment from Russia to Cyprus in 2009 was EUR 1.5 bln. However, the Central Bank of Russia puts the figure at USD 15.4 bln (EUR 11.1 bln).
Mullen said that the difference could be one of methodology.
She noted that total “net other investments assets”, which include bank deposits, were reported by the Central Bank of Cyprus as EUR 11.4 bln in 2009.
“Maybe the Central Bank of Cyprus counts as incoming bank deposits what the Russian Central Bank counts as outward FDI,” she told the Financial Mirror.
If one assumes that the Central Bank of Cyprus figures more accurately reflect investment in the real economy, Mullen estimates annual FDI inflows of EUR 1.1 bln per year.
Exports of accounting and legal services, based on Cypriot Central Bank data, are estimated by Mullen at EUR 0.5 bln per year, while exports of financial services, at EUR 0.3 bln per year.
Tax on banks on the estimated EUR 8 bln of Russian bank deposits is worth an estimated EUR 28 mln in tax revenue, while corporate tax is worth another estimated EUR 34 mln.
In total, and using Cypriot data, Russia to Cyprus business amounts EUR 2.7 bln, or EUR 2.1 bln per year if taxation is excluded, which is equivalent to 12% of GDP.
Mullen noted that this excludes spending by Russians based in Russia, Monaco or elsewhere and does not include the flow of bank deposits.