On May 16, 2024, the World Bank released its latest Macroeconomic Monitoring Report titled 'Translating Opportunities into Shared Prosperity'. The report evaluates the recent economic performance of the Turkish Cypriot community, highlighting a significant recovery in 2023. The real GDP marginally exceeded the pre-pandemic level, backed by record Green Line crossings and trade.
The labor market saw considerable gains in 2023 with over 9,600 new jobs created. Remarkably, women occupied forty-four percent of these positions, setting a historical high for female employment. Despite these encouraging trends, the economy continues to grapple with enduring challenges such as a high cost of living due to the depreciation of the Turkish lira and persistent inflation.
Goran Tinjic, World Bank Program Manager for Southern Europe stated that "Food inflation in the Turkish Cypriot economy is the most elevated among European economies, presenting an acute risk to the most vulnerable populations who already struggle to make ends meet."
The World Bank predicts a moderation of GDP growth to 2.7 percent in 2024 due to domestic vulnerabilities and external pressures. However, it underscores ongoing increases in Green Line crossings, trade and labor force participation as opportunities for sustainable growth. The report also advocates strategic investments in green and digital transitions.
To enhance economic resilience and competitiveness, robust policy responses are needed to address structural challenges. Key recommendations include emergency support for the poorest and most vulnerable; strengthening energy security; advancing disaster risk management; catalyzing private sector competitiveness; and investing in human capital to offset pandemic-related losses.
This year's special issue emphasizes evidence-based policymaking for shared prosperity. It discusses how newly available datasets like the Household Budget Survey (HBS) and Input/Output Tables (IOT) can assist policymakers in making better-informed decisions.
Natasha Rovo, World Bank Senior Economist and lead author of the report said "The IOT analysis reveals opportunities for intra-island trade, which can contribute to reducing time and cost of production. Additionally, intra-island trade has the capacity to foster exchanges of knowledge, technology, and synergies, thereby benefiting companies from both the Turkish Cypriot and Greek Cypriot communities."
The World Bank proposes a three-pronged approach to bolster evidence-based policymaking: enhancing data collection practices, promoting the use of data for policymaking, and investing in data literacy.
The Macroeconomic Monitoring Report is an annual publication funded by the European Union and prepared by the World Bank. It discusses economic developments and outlook for the Turkish Cypriot economy. The report's findings aim to guide local and international stakeholders in formulating policies that support economic convergence and integration in Cyprus.