Cyprus ranks 43rd out of 67 countries in 2024 IMD World Competitiveness Ranking

Cyprus ranks 43rd in a total of 67 countries, moving up two places compared to 2023, in the 2024 IMD World Competitiveness Ranking.

The improvement in the competitiveness ranking is mainly driven by advances in economic performance. The position of Cyprus in the 2024 ranking improved slightly with respect to government efficiency, while it remained stable in terms of business efficiency and infrastructure, a press release by the Economics Research Centre (CypERC) of the University of Cyprus says.

CypERC together with the Federation of Employers and Industrialists (OEB) are collaborating bodies of the Global Competitiveness Center, the IMD School of Business Administration in Switzerland.

The press release says that large fluctuations in direct investment flows from year to year, but also the amount of investment flows relative to the size of the economy affect the country's ranking (through economic performance), making it relatively volatile.

The improved economic performance of Cyprus during this year's evaluation was also contributed by the high growth rate of fixed capital investment, the export of services, the reduction of inflation, the low cost of living compared to other countries in the ranking, but also the consistently strong performance of the country regarding the stock of direct investment.

In terms of government efficiency, Cyprus' rating improved slightly in 2024 due to strong fiscal performance, as well as the country's long-standing tax advantage. In the remaining categories that make up the overall ranking of competitiveness, Cyprus' ratings in 2024 remained as low as in 2023.

For the fourth year in a row, the low efficiency of businesses is the most aggravating factor in the ranking, mainly due to weaknesses in administrative practices and the image of the country abroad.

Also, in this year's assessment, deficiencies in the country's basic infrastructure (e.g. energy infrastructure) and weaknesses in the education sector are reflected more strongly than in previous years. However, deficiencies previously identified in aspects such as technological infrastructure, digital transformation in businesses and corporate social responsibility appear to be gradually corrected.

Among the most notable improvements in the overall functioning of the economy identified in this year's assessment are the increase in fixed capital investment (in real terms), a reduction in inflation and a strengthening of the fiscal surplus (as a percentage of GDP).

On the contrary, the slowdown in the rate of change of the GDP (total and per capita), as well as the dissatisfaction of businesses regarding the legislative framework for employment of foreign labor and environmental legislation, are among the criteria that have worsened significantly compared to last year's assessment.

For the efficiency of the state in 2024, Cyprus ranks 28th, rising two ranks compared to 2023. This year's rise was the result of the improvement of the evaluations in the sub-categories of public finances (e.g. maintenance of surpluses) and the institutional framework (e.g. upgrading the country's creditworthiness, gradual reduction of bureaucracy).

In contrast, Cyprus' rating deteriorated slightly in the sub-categories of tax policy (e.g. tax revenue as a percentage of GDP), business legal framework (e.g. legislation on the employment of foreign labour, threat of business activities from state ownership businesses) and the social context (e.g. shrinking income of poorer households, gender inequalities).

Despite the deterioration, Cyprus still outperforms most countries in criteria such as redundancy costs, new business density, corporate income tax rate and personal taxation. In the business efficiency category, Cyprus remained at the 55th position.

In this year's ranking, serious weaknesses are identified in criteria related to companies' awareness of changing market conditions, the ability of boards of directors to exercise effective control, the use of large databases and analysis in business decision-making, as well as the country's image (branding ) abroad.

In terms of infrastructure, Cyprus ranks 42nd out of 67 countries, remaining in the same rank as in 2023. The biggest deterioration was in the basic infrastructure sub-category where the country is placed in one of the worst ranks of the ranking, due to, among other things, of the deterioration in criteria concerning the management of water resources and cities, but also of serious deficiencies in energy infrastructure and energy production.

In 2024, Cyprus recorded an improvement in the technology infrastructure sub-category.

Low mobile broadband subscriptions and insufficient cyber security, appear to be gradually improved, while it continues to outperform most countries in exports of information and communication technology (ICT) services.

(Source: CNA)