Nicosia - The financial crisis that hit Cyprus has revealed the risks of an economic model heavily dependent on financial services, said European Commission in a competitiveness report yesterday.
“There is now an opportunity to restructure and modernise the economy along more sustainable lines,” said the Commission.
“Advantage could be taken of the negotiations for the new Structural Funds programming period to provide partial funding to develop a more balanced economic model and fund projects in sectors that suit Cyprus’ infrastructure and human capital,” it added.
Moreover, Brussels said the introduction of the economic adjustment programme in April 2013, which involves the downsizing and restructuring of the banking sector, will have an effect on day-to-day business transactions and “could threaten the viability of many firms and further reduce confidence”.
Nicosia was urged to take this opportunity to modernise the economy in sectors that suit Cyprus’ infrastructure and available human resources.
“The structural measures and reforms of the economic adjustment programme will support competitiveness and underpin sustainable and balanced growth in the long term.”
The role of manufacturing in Cyprus is less important than the EU average, measuring 6.1 % of value added against 15.4% in the EU as a whole, said the Commission report.
It published two industrial competitiveness reports highlighting where Member States have made progress in improving the business environment, exports and sustainability.
But the Commission said Cyprus employs slightly over 10% of the total workforce in manufacturing, the lowest rate in the EU (EU average 17.5%).