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North Cyprus Economy

The economy of the TRNC is dominated by the services sector including the public sector, trade, tourism and education, with smaller agriculture and light manufacturing sectors. The cyprus economy operates on a free enterprise system, with the private sector being the backbone of economic activity.

Despite some constraints (including the lack of private and governmental investment, high freight costs), the Turkish Cypriot economy turned in an impressive performance over the years 2003-2004, with growth rates of 9.6% in 2004 and 11.4% in 2003. Over the same period, per capita income almost doubled reaching $7,350 at the end of 2004, compared with $4,409 in 2002. This growth has been buoyed by the relative stability of the Turkish Lira, the employment of over 5,000 Turkish Cypriots in the Greek Cypriot economy, and by a boom in the education and construction sectors.

The partial lifting of travel restrictions between the two parts of the island in April 2003 has allowed movement of persons almost seven million crossings to date between the two parts of the island. In August 2004, new EU rules allowed goods produced in the north to be sold in the south provided they met EU rule of origin and sanitary/phyto-sanitary requirements. In May 2005, the TRNC adopted a new regulation "mirroring" the EU rules and allowing certain goods produced in the south to be sold in the north. Suppliers of imported products in the government-controlled area cannot directly serve the Turkish Cypriot market and vice versa. Despite these efforts, direct trade between the two communities remains very limited.

Turkey remains, by far, the main trading partner of TRNC, supplying 60% of imports and absorbing over 40% of exports. Turkey also provides loans and financial assistance to TRNC. A nkara provided $200 million in 2002 and pledged $450 million for the 2003-05 period. The Turkish aid goes towards developing light industry, banking, tourism, and higher-education institutions.

The EU is the second-largest trading partner of TRNC, with a 25% share of total imports and 28% share of total exports. Total imports increased to $853.1 million in 2004 (from $477.7 million in 2003), while total exports increased to $61.5 million (from $50.6 million in 2003).

Imports from the U.S. reached $7.1 million in 2004, while exports to the U.S. were less than $10,000.


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