Cyprus has an open free market. The economy is driven by the service and tourism sectors and an export-oriented industry. The success of Cyprus as a stable, economically strong country is demonstrated by the socio-economic indicators especially from the relatively low inflation and unemployment rates in addition to the relatively high GNP growth rate and income per head.

In recent years the economy has been growing at an annual rate of over 3.8% per cent. Also the per capita GDP in EUROS is over €18,000 which is one of the highest in the region. Considering other factors, such as excellent housing conditions, low crime rate, pollution free environment and lower cost of living than in most European countries, one may conclude that the quality of life is better than that reflected by the per capita income.

S O C I O - E C O N O M I C   I N D I C A T O R S
	Units	2006	2005	2004	2003
Real GDP growth	%	3.8	4.0	4.2	1.9
Inflation rate	%	2.49	2.56	2.29	4.14
Unemployment rate	%	3.6	3.7	3.6	3.5
Current account balance	% of GDP	-5.9	-5.9	-5.0	-2.2
Total Public Debt	% of GDP	65.2	69.1	70.2	68.9
Population (free area)	000’s	778.7	766.4	749.2	730.4
GDP per capita in euros €	000’s	18,572	17,760	17,166	16,320

Currency
As of 1st of January 2008 the official currency of Cyprus is the Euro (€).

Foreign Investment
The strategic location of the island, the high calibre and well-trained human resources, the excellent climate and the reasonably developed infrastructure, are some of the factors, which make Cyprus an attractive place for foreign investment. The favourable tax regime as well as other incentives, such as a free industrial zone area, make Cyprus an ideal location for international businesses when structuring their operations.

Transit Trade
Cyprus is one of the leading transit centres in the Mediterranean and the most important in the Eastern Mediterranean.
The island’s strategic location combined with the existence of other favourable factors, e.g. efficient port facilities, advanced business infrastructure, minimal customs formalities and a stable political environment helped in the development of the container transhipment business in Cyprus which started in the late 1970s.

About 120 shipping lines include Cyprus in their regular schedules and 6.000 ships totalling 18 million net registered tonnes call at Cypriot ports each year. The Limassol and Larnaca ports are the island’s main gateways handling well over 6 million tonnes or two-thirds of the total volume of sea borne cargo, including the entire traffic in transit. Both ports are increasingly being used as regional warehouse and distribution centres. They also constitute a major container trans-shipment centre in the eastern Mediterranean.

The Cyprus Stock Exchange (CSE)
The CSE is a legal entity in the form of a public corporate body. It is governed by the CSE Council and is supervised by the Cyprus Stock Exchange Committee (CySEC) both of which are appointed by the Government.  The CySEC oversees the operation of the market. The Council is responsible for the operation and management of the CSE. The Stock Exchange Law for the regulation of the securities market in Cyprus and for the establishment and operation of the CSE was passed by the House of Representatives in April 1993. The Council of the CSE and the CySEC were appointed by the Council of Ministers in December 1993 with the responsibility of preparing detailed regulations to govern the operation of the CSE.

The Stock Exchange regulations were prepared and passed as legislation in 1995 and the CSE commenced operations officially on 29 March 1996. The legal framework for the CSE is largely based on the relevant EC Directives and practices, adjusted, where this was considered necessary, to local conditions. The Law and Regulations which have been approved by the House of Representatives, provide for a framework, which aims to foster the orderly and efficient trading of securities.

The process of acquiring shares by foreigners is simple enough and is more or less similar to that applicable to locals. Payment for any transaction by foreign and Cypriot emigrants alike should be made through external accounts.

The Stock Exchange sets regulations for the following:

• Prerequisites for member firms registration
• Member's obligations-Code of Conduct
• Trading rules
• Clearing and settlement
• Disciplinary powers of the CSE relating to members and employees of the Stock Exchange
• Obligations of companies after floatation
• Announcements of events and disclosure of directors' interests
• Common Compensation Fund
• Commissions and fees
• Mergers & Acquisitions

For more information on how to explore the opportunities offer by dynamic Cyprus Economy, contact our firm of Cyprus Chartered Accountants.