Booming economy drifting into dangerous waters

Booming economy drifting into dangerous waters
Published: 01 January 2007

In Turkish Cyprus, per capita income has risen from USUS$5,000 to $11,000 in just two years thanks to a boom in the construction industry. Growth has averaged 12 percent but there is no way that such growth can be sustained. With imports at US$1.2 billion and exports at US$66 million the current account deficit remains a major issue

Residential construction is the key to the miracle the economy has been experiencing over the past two years, with per capita income rising from $5,000 to $11,000 thanks to the boom. Bank deposits have grown to $3.3 billion, up from $1.6 billion. Growth has been 15 percent, 13 percent and 7.8 percent for 2004, 2005 and 2006 respectively.

After 2004, a significant increase in imports was seen but the same cannot be said for exports. Imports went up to $1.186 billion from $309 million in 2004 and exports were at $45 million in 2004, rising to only a mere $66 million.

Vehicles top the list of imported goods followed by cement and clinker, (Holcim recently commissioned a new grinding plant) reinforced steel, home appliances, furniture and household goods, textile manufacturing equipment and industrial machinery, which make up 30 percent of all imports.