MAY 16, 2024—The World Bank’s latest Macroeconomic Monitoring Report ‘Translating Opportunities into Shared Prosperity” assesses the recent economic performance of the Turkish Cypriot community, revealing a notable recovery in 2023, with real GDP slightly surpassing the pre-pandemic level. The report also recommends policy reforms to tackle longer-term challenges and consolidate short-term opportunities toward sustainable growth.
The economic recovery was supported by record high Green Line crossings and trade, namely the movements of people and goods across the Green Line. Significant gains were observed in the labor market in 2023, with over 9,600 new jobs created, forty-four percent of which were taken up by women, marking an historic high in female employment. However, despite these positive developments, the economy faces persistent challenges, including a high cost of living exacerbated by the Turkish lira’s depreciation and high inflation. Inflation remained significantly high in the Turkish Cypriot economy throughout the post-pandemic period.
“Food inflation in the Turkish Cypriot economy is the most elevated among European economies, presenting an acute risk to the most vulnerable populations who already struggle to make ends meet,” said Goran Tinjic, World Bank Program Manager for Southern Europe.
Looking ahead, the World Bank forecasts the moderation of GDP growth to 2.7 percent in 2024, reflecting both domestic vulnerabilities and external pressures. Nonetheless, the Report highlights continued increases in Green Line crossings, trade and labor force participation as opportunities for sustainable growth, alongside strategic investments in the green and digital transitions.
The Report advocates for robust policy responses to address structural challenges, thereby enhancing economic resilience and competitiveness. Key policy recommendations include providing emergency support to the poorest and most vulnerable people; strengthening energy security; advancing disaster risk management; catalyzing private sector competitiveness and investing in human capital to mitigate pandemic-related losses. Despite progress, Green Line trade remains well below potential and action is needed to tackle long-standing bottlenecks.
This year’s special issue of the Report focuses on the importance of evidence-based policymaking for shared prosperity and discusses how the newly available datasets, namely the Household Budget Survey (HBS) and Input/Output Tables (IOT) can help policy makers to take better informed decisions. “The IOT analysis reveals opportunities for intra-island trade, which can contribute to reducing time and cost of production. Additionally, intra-island trade has the capacity to foster exchanges of knowledge, technology, and synergies, thereby benefiting companies from both the Turkish Cypriot and Greek Cypriot communities,” said Natasha Rovo, World Bank Senior Economist and lead author of the report.
In conclusion the World Bank suggests a three-pronged approach to strengthen evidence-based policymaking: enhancing data collection practices, promoting the use of data for policymaking, and investing in data literacy.
About the Macroeconomic Monitoring Report:
The Macroeconomic Monitoring Report is an annual report funded by the European Union and prepared by the World Bank to discuss economic developments and outlook for the Turkish Cypriot economy. Its findings aim to help guide local and international stakeholders in formulating policies to support economic convergence and integration in Cyprus.
The full report content can be found in the link below: https://www.abbilgi.eu/
About the World Bank
The World Bank Group has a bold vision: to create a world free of poverty on a livable planet. In more than 100 countries, the World Bank Group provides financing, advice, and innovative solutions that improve lives by creating jobs, strengthening economic growth, and confronting the most urgent global development challenges. The World Bank Group is one of the largest sources of funding and knowledge for developing countries. It consists of the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID).
About the European Commission
The Aid Programme for the Turkish Cypriot community “Supporting Economic Convergence and Integration in Cyprus”, based on the Council Regulation 389/2006, aims at facilitating the reunification of Cyprus by encouraging the economic development of the Turkish Cypriot community, with particular emphasis on the economic integration on the island. The Aid Programme also focuses on improving contacts between the two communities and with the EU, and on preparation for the EU body of laws (also referred to as acquis communautaire).
For more information, please visit: Aid Programme for the Turkish Cypriot community (europa.eu)
