Publication: Turkish Cypriot Community: Translating Opportunities into Shared Prosperity - A Macroeconomic Monitoring Note : Special Issue - Evidence-based Policy Making for Shared Prosperity
Loading...
Date
2025-02-28
ISSN
Published
2025-02-28
Author(s)
Editor(s)
Abstract
The recovery of the Turkish Cypriot (TC) economy in 2023 was stronger than expected, and GDP is estimated to have rebounded to its pre-pandemic level. Following a deep recession in 2020—the deepest in Europe and the history of the TC economy, and after a modest recovery in 2021, the TC economy rebounded more vigorously in 2022, with GDP growth reaching 13.3 percent, and it is estimated to have grown at above 5 percent in 2023. Real GDP is estimated to have finally recovered to, and slightly surpassed, the pre-pandemic level. In 2023, Green Line (GL) crossings reached new record highs, as well as GL trade. The increase in GL trade reflects both structural progress and short-term opportunities, but despite this significant progress, it remains well below potential both in terms of volume and composition, with the top five products accounting for 88 percent of total GL trade. The agriculture sector 2023 is estimated to have contributed positively to growth, benefiting from the Turkish lira (TL) depreciation, reduced input prices, and favorable weather. Robust's imports reflect resilient domestic demand despite high inflation that is reducing purchasing power. The IOT analysis concludes three main findings, unveiling vulnerabilities and opportunities for the private sector. These findings are: (i) a strong reliance on services and a small domestic industrial production; (ii) a high dependence on imported vs domestically produced inputs for the TC economy, relative to its size; and (iii) a high dependence on imported inputs in the agriculture and industry sectors, although less so in the services sector.
Link to Data Set
Citation
“World Bank. 2025. Turkish Cypriot Community: Translating Opportunities into Shared Prosperity - A Macroeconomic Monitoring Note : Special Issue - Evidence-based Policy Making for Shared Prosperity. © World Bank. http://hdl.handle.net/10986/42883 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Turkish Cypriot Community(World Bank, Washington, DC, 2018-11)The Turkish lira (TL) has depreciated to an extent not seen since the 2001 crisis, reaching its lowest level in September 2018 (TL 6.37/US 1.00 dollar), losing 66 percent of its value against the US dollar since January 2018. This Regular Economic Report focuses on the likely impact of the depreciation on the Turkish Cypriot (TC) economy. Although the magnitude of the 2001 depreciation eventually turned out to be double the current depreciation, the reaction of the economy in 2001 offers useful insights into understanding the situation today. The report also discusses the financial situation of Local Communities Bodies (LCBs), whose budgets are highly dependent on transfers from the central administration. With the TL depreciation, fiscal pressures will arise at the central level, as with the local level, where the quality of service delivery is likely to be eroded as a result. To encourage spending reductions, the central administration could toughen its approach and reject budgets based on implausible revenue projections. It could encourage wage bill reductions by enforcing current limits on staffing and overall wage spending. It could also assist LCBs to improve the efficiency of services, such as water supply and solid waste management, by encouraging joint service arrangements among small LCBs. But much of the power to improve the situation lies with the LCBs themselves, as they have a considerable degree of fiscal autonomy despite the limits imposed by central regulations. They can increase basic tax rates up to the rate of inflation and impose higher valuations; and are also free to increase water tariffs (subject only to pro forma review) and the rate of various service charges within a range set by central regulation. Although their ability to reduce the number of civil servants is limited, they have considerable control over the numbers and wages of contracted staff and front-line service providers. The first section of this report discusses recent economic developments in the TCc with a focus on the likely economic impact of the TL depreciation. The second section assesses the state of the LCBs’.Publication Turkish Cypriot Community Workforce Development(World Bank, Washington, DC, 2016)For the last 50 years, the Turkish Cypriot community (TCc) has remained outside the effective control of the government of the Republic of Cyprus (RoC). The community displays typical characteristics and challenges of a small island economy, and after years of rapid growth and income convergence, it is unlikely to replicate its pre-2009 economic performance in the medium term. Sound macroeconomic policies and structural reforms, thus, become all the more crucial if the community is to regain the growth momentum of the early-2000s and address some of the labor market issues. Structural reforms should, among other things, aim to remove barriers to an expanding private sector, and strengthen domestic and external market competitiveness. To do this, the Turkish Cypriot community needs to better align its workforce and Workforce Development (WfD) policies to the needs of the labor market and of the private sector in particular.This study aims to assess the TCc’s overall WfD system. Where shortcomings are identified, the study offers suggestions on how to improve the quality and relevance of the skills produced by the community’s workforce system, including Technical Vocational Education and Training (TVET) at the secondary and postsecondary level, and on-the-job learning. This report presents a comprehensive diagnostic of a WfD system’s policies and institutions.Publication Socio-Emotional Skills for Labor Market Outcomes in the Turkish Cypriot Community(World Bank, Washington, DC, 2020-06)The labor market of the Turkish Cypriot community (TCc) is characterized by low participation and low employment rates, especially among youth. A series of World Bank reports on the Turkish Cypriot (TC) labor market and higher education sector between 2016 and 2019 found a mismatch between the skills generated by the higher education system in the TCc and those in demand in the labor market. Socio-emotional skills are critical determinants of whether youth can work towards achieving their aspirations in the course of their education, and whether they are likely to find and sustain employment over the longer term. When questioned about the labor supply, employers in the TCc pointed to a lack of technical, interpersonal and socio-emotional skills among TC youth and students; this, in turn, reduces their employability due to their low productivity and effectiveness in the workplace. This remainder of this report contains sections on experimental design, data and empirical strategy, implementation, results, discussion and conclusion.Publication Poverty and Social Assistance in the Turkish Cypriot Community(World Bank, Washington, DC, 2019-02)This report profiles poverty and assesses the performance of the social assistance (SA) system in the Turkish Cypriot community (TCc). The aim of this report is to provide information and evidence-based analysis to policy-makers on the determinants of poverty in the TCc and on the effectiveness of the community’s social assistance programs, with the ultimate objective of putting forward recommendations on how to improve policy alleviating measures. The poverty profile developed in this report can provide policymakers with vital information on the characteristics and living conditions of poor households in the TCc. The report presents information on the poverty and inequality rates in the TCc, highlights the individual and household characteristics of the poor, as well as the regional aspects of poverty. This report also presents the first assessment of the TCc’s SA system since 2006. This report consists of three chapters. The first chapter describes the data used and the methodology adopted in the report. The second chapter presents poverty and inequality indicators for the TCc and provides a profile of poor households. The third chapter focuses on the SA system in the TCc. After briefly describing such system, the chapter assesses its performance. Some concluding remarks and policy recommendations bring the note to a close.Publication Turkish Cypriot Economy, March 2021(World Bank, Washington, DC, 2021-03)The special topic of this edition of the Macroeconomic Monitoring report focuses on the TC administration’s ‘public’ financial support to the agriculture sector. Due to the Turkish lira depreciation, the recent adverse climate conditions, and exacerbated by the COVID-19 crisis, the agriculture sector suffered significantly in 2020. However, the severe impact on the sector was also the result of several long-standing inefficiencies and low productivity. Financial support from the central budget for agriculture comes at a significant fiscal cost to the overall TC economy, while at the same time agricultural productivity has been stagnating. The COVID-19 pandemic has served to exacerbate these existing challenges through disruptions along the food value chain. These problems have affected small-sized farmers the most, given that they are the most vulnerable to income shocks and higher retail prices. Reforming the subsidy system for agriculture could help generate greater fiscal space in the medium term, and also help foster economic diversification and enhance productivity.
Users also downloaded
Showing related downloaded files
Publication Doing Business 2020(Washington, DC: World Bank, 2020)Doing Business 2020 is the 17th in a series of annual studies investigating the regulations that enhance business activity and those that constrain it. It provides quantitative indicators covering 12 areas of the business environment in 190 economies. The goal of the Doing Business series is to provide objective data for use by governments in designing sound business regulatory policies and to encourage research on the important dimensions of the regulatory environment for firms.Publication Equatorial Guinea Country Economic Memorandum(Washington, DC: World Bank, 2025-03-12)The focus of this Country Economic Memorandum (CEM) is to review key policy and reform options for Equatorial Guinea to build the foundations for renewed, diversified, and more inclusive growth. The CEM thus aims to contribute to the government’s economic development and diversification agendas. The first chapter of the report examines the drivers of past growth, and the country’s asset portfolio, and discusses possible long-term growth trajectories. The second chapter examines fiscal policy as the main instrument for efficient transformation of natural capital into physical and human capital, and outlines the fiscal challenges associated with the reliance on the volatile oil and gas markets. It identifies the key gaps in public financial management, including the challenges posed by climate change and provides reform options for implementing an effective fiscal policy. The third chapter explores the present state of education, health, and social protection and discusses priority options to boost human capital. The fourth chapter then turns to the private sector and the main cross-cutting issues that need to be addressed to encourage higher investment, innovation, and productivity. The final chapter drills down into some key sectors which are likely to play a prominent role in any new growth strategy. These include digitalization in both the public and private sectors, and integration into the world economy through trade and ecotourism.Publication Principles for Effective Insolvency and Creditor/Debtor Regimes, 2021 Edition(World Bank, Washington, DC, 2021-04-22)Effective creditor and debtor rights and insolvency systems are an important element of financial system stability. The World Bank Group accordingly has been working with partner organizations to develop principles for insolvency and creditor and debtor rights systems. The principles for effective insolvency and creditor and debtor regimes are a distillation of international best practice on design aspects of these systems, emphasizing contextual, integrated solutions and the policy choices involved in developing those solutions. The principles have been designed as a broad-spectrum assessment tool to assist countries in their efforts to evaluate and improve core aspects of their commercial law systems that are fundamental to a sound investment climate, and to promote commerce and economic growth. Efficient, reliable, and transparent creditor and debtor regimes and insolvency systems are of key importance for the reallocation of productive resources in the corporate sector, for investor confidence, and for forward-looking corporate restructuring.Publication Zambia Poverty and Equity Assessment 2025(Washington, DC: World Bank, 2025-02-25)Zambia is simultaneously amongst the poorest and the most unequal countries in the world. In 2022, 64.3 percent of the population - about 12.6 million individuals - was living on less than US$2.15 a day. This level is not only the 6th highest in the world but it is also misaligned with the country’s Gross Domestic Product (GDP) per capita level. In four of the five poorer countries, GDP per capita is between one-quarter and one-half of Zambia’s GDP per capita. The remaining country is South Sudan, which is immersed in a protracted fragility and conflict situation. At the same time, consumption inequality is high, even when compared with the sub-group of highly unequal resource-rich countries. In 2022, the Gini index stood at 51.5 - significantly above the World Bank’s newly adopted high-inequality threshold of 40. This places Zambia as the country with the 4th highest inequality in the region and the 6th highest globally. Resource-rich countries with similar or higher inequality have substantially lower poverty levels.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.