CyprusProfile talks to Stelios Americanos, Managing Partner of Stelios Americanos & Co LLC, on key areas of opportunity or growth, and expectations for Cyprus in 2018
Cyprus’ strong economic recovery will continue in 2018 with the GDP expected to be 3.2% (2017: 3.8%) which is well above the European Union average. Inflation forecast shows an increase in 2018 to 1.2% (2017: 0.7%) well within the healthy limits, with unemployment expected to be near the 10% mark in comparison with 13% of the year before.
The main pillars of recovery are to continue flourishing in 2018 with tourism expected to have yet another record year in tourist arrivals. 2017 witnessed an increase of 14.6% year on year and already January 2018 arrivals are more than 20% up from January 2017.
The Cyprus government further enhanced the citizenship by investment scheme allowing foreign nationals to obtain a Cyprus passport whilst encouraging relocation of high net worth individuals and businesses through tax and other incentives.
The resulting effect of tourism and citizenship scheme will continue to have a positive effect on the construction industry which had a tremendous recovery in 2017 with the prices of immovable property in certain areas showing significant increase. The knock-on effect was for other sectors to recover as well.
At the same time gas exploration drilling continues in Cyprus’s exclusive economic area with ENI, EXXONMOBIL, TOTAL, SHELL and KOGAS planning to continue their drilling expeditions. ENI’s recent drill was successful announcing a promising gas discovery.
The service sector will continue its role as one of the main growth contributors to the Cyprus economy. The government is working hard in expanding the double tax treaty network of Cyprus which will allow more investors to use Cyprus as a springboard to their ventures. More and more investors are interested in setting up offices in Cyprus to manage their international activities taking advantage of the favourable tax system, excellent legal framework and near perfect living conditions. This, coupled with the citizenship by investment scheme are expected to be at the forefront of the service sector growth opportunities.
Furthermore, the introduction of the Betting Law and the establishment of the National Betting Authority has paved the way for the long awaited 7-star Hotel and Casino Resort to be built in Limassol as well as online betting companies. The Casino resort investment will be in the region of 550 million euro with ‘satellite’ casinos in other cities. The resort is expected to begin operations in 2021, with the satellite casinos within 2018. More than 11,000 jobs are expected to be created directly from this investment.
Fund establishment and administration will continue strongly in 2018 with investors turning to more high profile and regulated jurisdictions than traditional tax heavens. The modernization of the Cyprus Alternative Investment Fund Law and associated Managers Directive has provided a competitive and attractive environment for funds to operate.
2018 will also be the year were the Commercial Court is expected to start operations. The Justice Minister and the Supreme Court have decided to set up a Commercial Court, to adjudicate Commercial cases. Nicosia and Limassol are the expected locations. The aim is for the new court to fast-tracking cases and resolving them within 18 months. The set up will be independent from the District Courts and have its own structure.
Overall the economy has recovered from the 2013 recession showing healthy signs of growth and potential.
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