The geographical location of Cyprus, forming a bridge between East and West, along with its advanced transport and telecommunication infrastructures, have enabled the country to transform itself into an important trading hub.
Overseas trade and commerce is not just a vital element of the island’s economy, it is practically written into the Cypriot DNA. Deriving its name from the Greek word for copper – one of the most traded and valuable metals in the world –, the island was an important source of copper and copper products which were exported throughout the region for centuries. While mining in Cyprus has become a niche activity nowadays – although there is a renewed interest in the island’s deposits due to the high copper prices –, the country’s importance in trade has not diminished and Cyprus has developed into a trading post for a variety of goods and products.
Strategically situated at the crossroads of three continents, Cyprus has become the EU’s key trading hub in the Eastern Mediterranean, providing a point of exchange between Europe, Africa and Asia. Having established itself as major transshipment centre, the island is also especially beneficial to manufacturers building up European, Middle Eastern and North African export activities, allowing for maximum efficiency in the process chain taking the product from factory to market.
Trade with Europe and Beyond
Due to the island’s small domestic market and the open nature of its economy, trade and access to international markets is of utmost importance for Cyprus’ well-being. The country’s trade balance is traditionally in deficit because the island has to import extensively in order to satisfy domestic demand, while the island also depends on imports for its energy supplies.
Traditionally, more than half of Cyprus’ trade in goods is with the European Union, and the island’s main export partners are Greece, the United Kingdom, Germany and Lebanon. During the first semester of 2016, exports accounted for €1.07 billion, half of which consisted of shipments to other EU member states. Exports to Near East and Middle Eastern Countries occupied the second place in importance with €147 million. The main domestic export commodities are mineral products, pharmaceutical products, photo-sensitive devices, and raw and manufactured food products.
Total imports in the same period amounted to €3.9 billion, of which €2.67 billion were arrivals from other EU member states, €101 million from other European countries and €1.64 billion imports from third countries. The leading import partners are Germany, Greece, Italy and the United Kingdom, while the chief imports are fuels and lubricants, machinery, chemicals, vehicles, iron and steel.
Industrial Products Dominate Exports
Manufactured products constitute the bulk of Cyprus’ domestic exports and represent approximately 49.5 per cent of the market. The predominance of small-to-medium-sized manufacturing enterprises means that companies have the flexibility both to respond quickly to changes in customer requirements and to adopt new production techniques. Modern technologies have brought with them both quality improvement and longer product shelf-life, while the recent application of more scientific marketing techniques is opening up new customer bases. As in other segments of the island’s economy, Cyprus is also aiming to attract international companies to its shores, highlighting the potential to use the island as both a production and an export base.
Cyprus’ transformation into a European and regional support hub for firms doing business in the region also means that companies can take advantage of a full services offering including warehousing, headquartering, high-tech repair centres and servicing, software development and testing centres. Fostering and supporting the development of high-value manufacturing for many years, Cyprus-based enterprises benefit from numerous government-sponsored incentive schemes, designed to encourage the diversification and expansion of manufactured exports.
Agriculture: Halloumi Leads the Way
Offering the international market an ever-expanding range of fruit and vegetables, Cyprus has justifiably gained the soubriquet ‘The Garden of the Mediterranean’ and agricultural products are an important component of the economy, accounting for some 37 per cent of the island’s total domestic exports. Cyprus’ famous Halloumi cheese – made from goat, sheep or a combination of goat, sheep and cow’s milk – has become an export success story, while other fresh produce include citrus fruit, grapes, melons, potatoes, vegetables and aromatic herbs. There are more than 30 fresh produce exporters, the majority of whom are themselves agricultural producers. Other agrifood products gaining in importance are fruit and vegetable juices, fish and meat products.
An increasing number of exporters provide specially designed labelling, tailor-made to meet the requirements of specific supermarkets and wholesale buyers. Halloumi is now packaged in this way and distributed to upmarket supermarket chains worldwide. The name «Halloumi» is registered in the European Union as a «Collective Trade Mark» and on this basis, no other product can be marketed in the EU under this name. Cyprus is also in the process of registering the name «Halloumi» in the European Union as a Protected Designation of Origin (PDO), so that only products produced in Cyprus under certain specifications can be marketed as such.
After some difficult times, the Cypriot wine industry has also successfully repositioned itself to meet the changing demands of the international market, and it now exports smaller quantities of a high quality product for the discerning consumer.
Oil Imports: Tide Has Turned in Cyprus’ Favour
To date, a large majority of Cyprus’ imports consist of fuel oil. With no indigenous sources and being away from international networks of electricity, Cyprus depends on imported fossils for the generation of its electricity needs. They currently account for one fourth of the island’s imports. However, the recent discovery of natural gas in Cyprus’ economic zone is expected not only to make the island self-sufficient in terms of its energy needs but to turn the country into an energy exporter. Cyprus’ plans to establish an integrated Energy Centre, where natural gas and other fuels imported from the oil producing countries in the region, will be stored, treated and distributed to markets in Europe and beyond, fits in neatly with the island’s overall role as trading hub.
Building and Strengthening Trade Ties
The import and export business in Cyprus is supported by an excellent transport infrastructure. The island is served by over 100 shipping lines, connecting it to all the key ports and destinations in the world. In addition, two international airports guarantee the fast and efficient transport of goods, ensuring Cyprus remains one of the most attractive bases for logistics companies in the region.
Promoting the island’s strategic position, Cyprus’ Ministry of Commerce, Industry and Tourism is also constantly strengthening trade ties and relationships with other countries. The Ministry operates 11 trade centres situated in carefully targeted markets such as Austria, Egypt, France, Germany, Greece, Lebanon, Poland, Russia, the United Arab Emirates, the United Kingdom, and the USA.
Trade Partner of Choice
Cyprus’ logistics providers offer a full suite of regular and customised services that support the import and export of goods of Cypriot and foreign companies from and to the EU as well as on an international level. The island’s unique location on the main trade routes through the Mediterranean offers Cypriot companies numerous opportunities to export their products to nearby markets, while the island’s dependency on imports means demand for goods and raw material will remain stable, making the country an important trade partner for outward-oriented businesses.
Updated October 2016