The Information and Telecommunication sector (ICT) has emerged as the leader in the growth of the Cypriot GDP, according to data released by the Statistical Service of Cyprus (CyStat).
The performance in the ICT sector mirrors the growing significance of technology in economic activities, bolstered by governmental initiatives to attract the relocation of ICT companies to the island.
Based on the latest available data processed by the Cyprus News Agency (CNA) from CyStat, the ICT sector exhibited an average growth rate of 15% over the past decade, outpacing all other sectors of the economy.
Following ICT, sectors associated with tourism, such as accommodation and food service activities, witnessed an average growth of 12.7%, while administrative and support service activities (including tourism-related aspects) recorded an average growth rate of 10%.
According to CyStat’s provisional data, the sector’s share in Cyprus’ gross value-added reached 9.6% in 2022, making it the third-highest, trailing Wholesale and Retail Trade at 12.2% and Financial and Insurance Activities at 9.8%.
A decade ago, the financial sector led with 12% of the total output, highlighting the diversification of the Cypriot economy after the 2013 financial crisis.
In absolute figures, the ICT sector contributed €2.33 billion to Gross Value Added (GVA) in 2022, marking an increase of 277% compared to a decade ago. This surge was largely driven by significant annual increases in the last three years, propelled by government incentives aimed at attracting foreign ICT companies to Cyprus.
Marios Tannousis, CEO of the Cyprus Investment Promotion Agency, Invest Cyprus, credited Cyprus’ success in attracting multinational technology companies to the government’s attractive incentives package. He highlighted the efficiency of the Business Facilitation Unit, launched by the Ministry of Energy, which facilitates the swift processing of company registrations and the issuance of necessary work permits.
In statements to CNA, Demetris Nissiotis, President of the Cyprus Information Technology Enterprises Association (CITEA), identified two key factors behind the sector’s growth: Invest Cyprus’ efforts in attracting tech companies and the increasing global significance of technology, particularly after the Covid-19 pandemic.
Nissiotis sees further momentum in the sector due to government investments in digitisation through the Recovery and Resilience plan, aligned with the European Union’s strategy focusing on digitisation and green transition.
However, sustaining the sector’s momentum requires addressing challenges, such as 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 said.
Nissiotis stressed the need for short-term measures to address the skill shortage, advocating for reskilling and up-skilling initiatives and attracting staff from other sectors and abroad. He also highlighted the long-term challenge of linking the sector with schools to boost technology skills among the population.
“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.”
CyStat’s ranking of GDP top sectors in 2022 positions Wholesale and Retail Trade, Financial and Insurance Activities, Information and Communication, Real Estate Activities, and Professional with Scientific Activities in the top five, contributing significantly to the country’s economic output.