Cyprus deteriorated in 2021 compared to other countries in the IMD World Competitiveness ranking.
According to data published on Thursday, June 17, Cyprus lost 3 positions over the year and took 33rd place out of 64.
The main reasons for this were:
- deterioration of the general economic situation due to the coronavirus pandemic
- significantly reduced efficiency of enterprises, mainly due to changing market conditions, technological problems and relatively high corporate debt
- deficiencies in the country's infrastructure, in particular, in the scientific and technical sphere.
This year's ranking for Cyprus has highlighted weaknesses that burden the competitiveness of companies and the country. Reforms that improve the institutional framework and promote digital transformation are expected to strengthen competitiveness and make the economy more resilient to technological and environmental challenges, but also more resilient to crises, the report says.
Cyprus' position deteriorated in three of the four categories.
Most of all indicators fell in the category of business performance. In the category of general economic indicators, Cyprus has maintained its position at the 2020 level.
Compared to last year, Cyprus has shown significant progress in areas related to low inflation, stronger long-term labor force growth and an improvement in the University Education Evaluation Index. A sharp deterioration in some criteria in this year's assessment, such as reduced investment in fixed assets, increased government subsidies and budget deficits, was the result of the COVID-19 pandemic.
Based on a survey conducted by the IMD Center, the five most important factors that make the Cyprus economy attractive are a business-friendly environment, a skilled workforce, a competitive tax regime, a high level of education and political stability.
In terms of economic performance, Cyprus ranked 13th (the same as last year).
By the way, international investment (for example, flows of stocks and investments to and from the country), long-term growth rates of the labor force, as well as the relatively low cost of living in the country have had a beneficial effect on the formation of this ranking. In contrast, criteria related to international trade (e.g. limited export of goods, low export diversification) as well as the domestic economy (e.g. resilience to economic cycles) had a negative impact on the rating of Cyprus.
In terms of government efficiency, Cyprus ranked 25th in 2021 (21st in 2020).
The lower ranking was the result of a deterioration in the position of Cyprus in all assessed subcategories. The public finance subcategory has deteriorated the most, with public debt as a percentage of GDP the biggest problem for government efficiency. Weaknesses in the institutional framework continue to negatively affect the rating, as in previous years.
In the business performance category, Cyprus ranked 43rd place (35th in 2020).
The drop in the rating in 2021 was due to the deterioration in the rating of Cyprus in all subcategories. Specifically in productivity and efficiency, labor market, finance, administrative practice, and business attitudes and values. By the way, Cyprus continues to show weaknesses in the criteria related to the stock market, the use of large databases and analysis, awareness of changing market conditions on the part of companies, the use of digital instruments and corporate debt.
However, it should be noted that Cyprus has performed excellently in terms of criteria in labor market subcategories (e.g. long-term workforce growth, financial specialization, managerial remuneration) and finance (e.g. access to financial services disaggregated by gender), banking assets.
In terms of infrastructure, Cyprus ranked 41st place in 2021 (down three places from 2020).
Cyprus continues to rank low in terms of science, technology and basic infrastructure, with deficiencies reflected in various criteria (e.g. science graduates, mobile broadband subscribers, internet speed, electricity costs for industrial purposes).
International Institute for Management Development (IMD) is an independent academic institution founded in Switzerland over 75 years ago.
The IMD publishes the IMD Global Competitiveness Report annually, which assesses the competitiveness of the economies of different countries. The assessment of the economy is based on 334 criteria based on official statistics as well as survey data from senior executives in each country.