THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Cyprus

Ranked 33rd of 149

At a glance

Ranks

33 rd on the Legatum
Prosperity Index™

39th
33rd
29th
57th
42nd
26th
35th
32nd
77th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Cyprus performs best on Safety & Security and Governance and scores lowest on the Natural Environment sub-index.

Visit our Rankings table to see how Cyprus compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Over the last decade, Cyprus has been delivering prosperity as expected given its wealth. However, since 2007, the country has moved down 7 ranks in the global Index, due to weaker performances in the Economic Quality and Governance sub-indices.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

The 2016 Prosperity Index shows how unstable Cyprus has been in delivering prosperity to its citizens over the last decade. While in 2010 the country’s prosperity level reached its peak, it then started declining as a result of the 2012-2013 financial crisis, which had (and still has) severe consequences particularly on Cyprus’ economic and governance spheres.

Cyprus has seen its prosperity fluctuate over the last decade, with a peak in 2010 and a major fall in 2014 after the financial crisis.
Cyprus has seen its prosperity fluctuate over the last decade, with a peak in 2010 and a major fall in 2014 after the financial crisis.

Like its peers in Southern Europe, Cyprus suffered the most in its Economic Quality sub-index, where it has posted a 17 rank decrease over the last decade. Particularly alarming is the unemployment rate, which has risen from 3.9% in 2007 to 15.6% in 2016. Additionally, the percentage of people comfortable with their income has decreased by two thirds, and less people are satisfied with their living standards (from 84 to 66% since 2007).

Despite these economic challenges, Cyprus has managed to improve its score in the Business Environment sub-index. Reforms aiming at creating a more competitive business climate have kept the overall situation in good shape. Positive steps have been made in facilitating access to credit and electricity, as well as in resolving insolvency, all of which have made it easier to start new businesses on the island.

In the Governance sub-index, here Cyprus has posted a 12 rank decline since 2007, halving its prosperity surplus. People’s perceptions have changed: confidence in honesty of elections has decreased from 75% to 45%, and trust in national government has fallen from 56% to a mere 20%. Yet, government effectiveness and rule of law remain quite stable, whilst judicial independence appears to have declined over the last ten years. It is worth recalling that the unique situation Cyprus is in is quite likely behind these changing or stagnating dynamics. Cyprus has been divided since 1974, when, after the military coup backed by Greece, Turkish troops occupied the northern side of the island and never left. Peace talks have been on and off since then, but no major resolution to the dispute that sees Greek Cypriots and Turkish Cypriots opposed has yet been reached.

Such internal division is reflected across the sub-indices. Safety & Security is the area where Cyprus maintains the biggest surplus in terms of prosperity delivered given the country’s wealth. The situation has improved over the last decade: there have been fewer incidents along the so-called Green Line (the United Nations-patrolled buffer zone created in 1964), and freedom of movement was enhanced in 2008, when the wall cutting across the heart of the capital Nicosia was demolished.

When it comes to the Personal Freedom sub-index, the Index shows a weaker performance than in 2007. Cyprus has the lowest tolerance towards immigrants of Western Europe, with only 56% of Cypriots answering positively against a regional average of 75%. Additionally, people feel less free than in 2007, and freedom of the press remains highly biased depending on which part of the country media report from. Yet, tolerance towards ethnic minorities has slightly improved, and the 2015 legalisation of civil unions represented a positive step for the country, together with its regional peers.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.