Service industries, such as banking and accounting, will drive growth in the Cypriot economy rather than construction and manufacturing, according to PricewaterhouseCoopers Cyprus.
The service sector may add 9,700 new jobs and generate 13 million euros ($16.9 million) a year in extra tax and social security revenue over the next five years, said the accountancy firm in a report entitled “Driving Jobs and Growth in Cyprus.”
The Central Bank of Cyprus said Dec. 7 the country’s economy will contract by 2.4 percent in 2012 and shrink by 3.5 percent in 2013. That compared with estimates made in June for a contraction of 1.1 percent this year and growth of 0.4 percent next year. The bank blamed recession and austerity measures implemented in exchange for an international bailout.
Tourism employed 17,900 people in Cyprus at the end of 2011, falling an average 1.7 percent a year in the period 2007 to 2011. That compared with 13,800 workers for international services, an average annual rise of 3.9 percent over the same period, according to the report.
Cyprus should seek to attract more companies to the island by implementing measures including tax breaks for venture capital firms and small and medium-sized enterprises, PwC said.