By Stelios Orphanides
The competitiveness of Cyprus’s economy was ranked 41st last year out of 63 countries surveyed, a drop of four positions from 2016, the University of Cyprus said.
The fall resulted from a lower ranking in the area of government and corporate efficiency and infrastructure, the Economic Research Centre (ERC) of the academic institution said in an emailed statement on Thursday, citing the findings of the 2018 IMD World Competitiveness Ranking. Cyprus’s overall drop was partly offset by economic performance.
The US, Hong Kong, and Singapore were ranked first, second, and third while Venezuela, Croatia, and Brazil took 63rd, 62nd and 61st positions respectively, according to the report. Cyprus fell behind Kazakhstan, Saudi Arabia, and Latvia and was still ahead of Italy, Indonesia, and India.
The financial risk factor, social security contributions, and the increase in homicides were among criteria which last year deteriorated considerably, the ERC said. On the other hand, economic output, gross domestic product per capita, and the fiscal balance improved substantially compared to last year.
A public opinion poll demonstrated that what makes the Cypriot economy attractive is its tax regime, its high level of education, the specialised labour force, and the business-friendly environment, the ERC added.
The island was 22nd among 63 countries in terms of economic performance, mainly on international investment and the comparably low cost of living, the centre said. On the other hand, the current account deficit, poor diversification of the economy, the high unemployment rate, including youth, had the opposite effect.
This year, Cyprus was ranked 28th in terms of government efficiency, down from 22 last year, mainly on the deterioration in the areas of the central bank policy, the country’s credit rating, which remains in the non-investment grade area for almost six years, bureaucracy, justice, disposable income, and legislation on competition and immigration, the ERC said. Last year’s fiscal surplus, helped in partly containing the slippage aided by the island’s tax regime, despite a small drop.
The decline in business efficiency to 53 this year from 50 last year, was mainly the result of deterioration in financial criteria such as financial risk factor, stock market, corporate debt, and the digital transformation of companies, partly offset by a minor improvement in administrative practices, the centre added.
Lastly, in terms of infrastructure, Cyprus fell one place to 41 mainly on technological and scientific infrastructure, the ERC said. Criteria related to education had a positive impact on infrastructure ranking.