Filenews 25 January 2022
The second Competitiveness Report of the Cyprus Economy was published today by the Cyprus Economic and Competitiveness Council (SOAK).
Since its establishment in 2018, the Cyprus Economic and Competitiveness Council has assumed responsibility for the systematic monitoring of the evolution of the competitiveness of the Cypriot economy and international trends, including the preparation of competitiveness reports for Cyprus.
The competitiveness reports, issued by the SOAK every two years, are the Council's main analytical tool for the integrated identification, evaluation and monitoring of the factors affecting the competitiveness of the Cypriot economy. The 2nd Competitiveness Report was prepared on behalf of the SOAK by the University of Cyprus.
The first Competitiveness Report (2019) had been submitted by the Minister of Finance to the Council of Ministers which decided to promote the implementation of the report's recommendations by the competent Ministries. In addition, the results of the Report were taken into account in the preparation of the Long-Term Strategy for the Sustainable Development of the Cyprus Economy.
Updates and expands the analysis and findings of the first report
The second Competitiveness Report (2021) updates and expands the analysis and findings of the first Report. It includes an assessment of the competitiveness of Cyprus in the context of a broad definition of the term competitiveness, which includes all the institutions, policies and other factors, including social and environmental, that support and maintain the creation of value by businesses and support the improvement of the living standards of citizens on a sustainable basis. It captures the comparative strengths as well as the weaknesses and challenges facing the economy, and provides policy recommendations to address the challenges and enhance the competitiveness of the economy.
Economic and social impact of the pandemic
The Report also includes a separate section on the economic and social impact of the pandemic and stresses the need to diversify the economy and strengthen its resilience by changing our economic model. The Report stresses the importance of formulating the Long-Term Strategy for the Sustainable Development of the Cypriot economy, which has included reform and investment measures that promote the transition to the green and digital economy, the diversification of the economy and the strengthening of its resilience, while a large number of them have been included for funding by the Recovery and Resilience Plan.
Competitiveness performance
The competitiveness performance of the Cypriot economy, both in total and in selected aspects, is recorded in the Report on the basis of internationally recognized indicators and methodologies, which are used in widespread benchmarking frameworks, such as the World Economic Forum's Global Competitiveness Report and the World Bank's Business Report. More than 150 specific indicators reflecting individual aspects of the competitiveness of the Cypriot economy are also examined and a comparison is made with the respective performance of 12 other selected economies and the EU average. There is also a long-term review of the performance of the economy's competitiveness.
Recognizing on the one hand the significant progress of economic growth that had been achieved in the years preceding the health crisis, the generally good regulatory and institutional conditions as well as the good market conditions prevailing in Cyprus, the analysis of the indicators identifies the following eight sectors in which the competitiveness of the Cypriot economy could be further enhanced.
More emphasis on effective implementation
According to the Report, in many cases no new policies are required from the government but a greater emphasis on the effective implementation and coordination of existing policies.
- Promotion of entrepreneurship and enhancement of the dynamic development of Cypriot businesses.
- Strengthening the interconnections and interaction between businesses, supporting their integration into networks of suppliers of international enterprises as well as the cooperation between business, research and academic community.
- Enhancing the uptake of digital technologies by incentivising the digitalisation of important sectors as well as strengthening digital skills and productivity-enhancing investments in information and communication technologies.
- Improving access to finance by continuing successful efforts to strengthen the banking system, as well as the development and availability of alternative sources of funding.
- Better use of human resources through education and training, by increasing graduates with qualifications in technical and natural science fields, as well as by enhancing digital competences and entrepreneurship skills, thus enabling them to reflect on both current and future requirements.
- Enhancing external connectivity by developing a strategy for international transport and connectivity, as well as facilitating interconnection with key international business partners.
- Attracting foreign direct investment through the formation of an attractive economic environment.
- Diversify the economy through the development of new sectors that will complement existing economic activities, and strengthen the resilience of key existing sectors.
The entire text of the 2nd Competitiveness Report on Cyprus can be found on the website of the Economic and Competitiveness Council (www.ecompet.cy). The report on the site is in Greek and English.
