Publication: Testing the Resilience of the Turkish Cypriot Economy: A Macroeconomic Monitoring Note - Special Issue : Enhancing Competitiveness and Promoting Economic Integration
Date
2022-03
ISSN
Published
2022-03
Author(s)
World Bank
Abstract
The Turkish Cypriot economy (TCe) has
struggled to recover since the onset of the COVID-19
pandemic in early 2020. With a contraction of 16.2 percent
in GDP in 2020, when the COVID-19 pandemic first took hold,
the TCe experienced the most severe recession in its
history, and the most severe recession among the economies
of Europe. Moreover, just as other economies were beginning
to recover, in 2021 the TCe underwent a phase of exceptional
political uncertainty and numerous exogenous shocks, testing
its resilience. With the emergence of new variants of the
virus, the COVID-19 pandemic continued to adversely impact
the TCe throughout 2021, with cases reaching a new peak at
the end of 2021 despite the Turkish Cypriot (TC)
administration’s efforts to prevent the spread of the virus,
together with its support for the health system, households,
and companies. Furthermore, a new record low in average
precipitation in 2021, a series of earthquakes at the
beginning of 2022, and weak energy security, with a recent
series of power outages experienced across the island, have
all revealed the intrinsic vulnerabilities of the island to
climate change and natural disasters. Building a competitive
private sector would require reforming business regulations
and procedures that are under the mandate of the TC
administration, and that should be aligned with
international best practices and the EU Acquis, irrespective
of the broader context of the political economy. Special
attention should be devoted to the regulation concerning
imports and GL trade. Pre-permits and licenses imposed by
the TC administration on imports, on top of regulatory
uncertainty and other cumbersome procedures, contribute to
increasing prices, penalizing consumers, and eroding
domestic competitiveness. A dialogue framework between GC
and TC private sectors could be established to support
solutions to the long-standing constraints that have been
impeding business cooperation across the GL, for the benefit
of all Cypriots.
Link to Data Set
Citation
“World Bank. 2022. Testing the Resilience of the Turkish Cypriot Economy: A Macroeconomic Monitoring Note - Special Issue : Enhancing Competitiveness and Promoting Economic Integration. © World Bank, Washington DC. http://hdl.handle.net/10986/39503 License: CC BY-NC 3.0 IGO.”