ICT is Cyprus’ fastest growing sector
The Information and Telecommunication is Cyprus’ fastest growing sector, according to GDP data published by Cystat, highlighting the momentum of the sector as a component of the Cypriot GDP.
In an analysis, the Cyprus News Agency (CNA) said the rising performance in the ICT sector reflects the ever increasing importance of technology in economic activity coupled with the efforts of the government to attract the relocation of ICT companies in the island.
In the last decade the ICT sector marked an average growth rate of 15% outperforming all other sectors of the economy. ICT was followed by accommodation and food service activities, a sector associated with tourism, with an average growth of 12.7% and administrative and support service activities (which also includes tourism-related activities) with an average growth rate of 10%.
According to Cystat’s provisional data, the sector’s share in Cyprus’ gross value-added rose to 9.6% in 2022 third highest behind Wholesale and Retail Trade which tops the ranks with 12.2% of total output and Financial and Insurance Activities with 9.8%. A decade ago, the financial sector was at the top with 12% of the total output, a change manifesting the diversification of the Cypriot economy following the 2013 financial crisis.
In absolute numbers, the ICT sector’s contribution in Gross Value Added (GVA) in 2022 amounted to €2.33 billion, marking a steep increase of 277% compared with the sector’s output a decade ago, with large annual increase in the last three years, driven by the incentives provided by the government to the relocation of foreign ICT companies in Cyprus.
Marios Tannousis, CEO of the Cyprus Investment Promotion Agency, Invest Cyprus, told CNA that Cyprus’ success in attracting a significant number of multinational companies of the technology sector stems from the government’s attractive incentives package promoted by Invest Cyprus, the private sector in coordination with the government.
He added that the package was accompanied by the successful and effective operation of the Business Facilitation Unit launched by the Ministry of Energy enabling swift processing of the company registrations and the provision of work permits, necessary for the operation of a company in Cyprus.
On his part, Demetris Nissiotis, President of the Cyprus Information Technology Enterprises Association (CITEA), which has 89 members, told CNA that two were the main reasons behind the sector’s growing performance: The attraction of tech companies in Cyprus, stemming from the effort of Invest Cyprus in the past years and the growing global significance of technology as tech companies are among the top performers in global rankings. “Especially following the Covid-19 pandemic, which was a pivotal point, this is becoming obvious in Cyprus as well,” he added.
Nissiotis also sees further momentum in the sector, due to investments earmarked by the government for digitisation via the Recovery and Resilience plan but also due to the policy of the European Union which has marked digitisation along with green transition as the main pillars of its strategy to boost the resilience of the EU economy.
With regard to ways of sustaining the sector’s momentum, Tannousis said it is important for international ICT and tech companies that invest in Cyprus to be able to operate in an efficient environment without red tape, adding that for this reason, Invest Cyprus and the government organize round table discussions between the President of the Republic, foreign investors and involved Ministers and Deputy Ministers.
«Through this dialogue, during which foreign investors outline challenges, concerns and proposals receiving responses by the President and Ministers, Cyprus’ investment environment is further strengthened contributing to economic growth and job creation through foreign direct investments,” Tannousis added.
He also highlighted that digitization is an important economic driver associated with education boosting productivity and economic growth.
On his part, Nissiotis said the sectors momentum is solid, noting however that Cyprus needs to address an obstacle, namely the shortage of local staff with the necessary skills.
«Skilled staff is not enough, therefore we need to intensify our efforts in the short-term and long-term,” he added.
According to Nissiotis in the short-term measures could foster reskilling and up-skilling encouraging staff from other sectors to migrate to ICT while attracting skilled staff from abroad.
The short and long-term challenge, he went on to say, is to link the sector with schools, boosting the population’s technology skills which would lead to increased percentages of students opting for information or STEM studies.
“This should start today but will yield results after five or ten years,” he said, adding that “the longer we take to embark on this effort, results will take longer to bear fruit.”
Cyprus’ GDP top 5 sectors
According to CyStat, the top 5 sectors in GVA terms is Wholesale and Retail Trade with a contribution of almost €3 billion in 2022, followed by Financial and Insurance Activities with €2.40 billion and Information and Communication with €2.33 billion. Real Estate Activities came fourth with €2.09 billion and Professional with Scientific Activities complementing the top 5 with €2.07 billion.