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

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

CypERC, in collaboration with the Federation of Employers and Industrialists (OEB), works with the Global Competitiveness Center at the IMD School of Business Administration in Switzerland.

The press release notes that large fluctuations in direct investment flows from year to year, as well as the amount of investment flows relative to the size of the economy, affect the country's ranking, making it relatively volatile.

Cyprus' improved economic performance during this year's evaluation was driven by high growth in fixed capital investment, the export of services, reduced inflation, a low cost of living compared to other countries in the ranking, and consistently strong performance regarding the stock of direct investment.

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

For the fourth year in a row, low business efficiency is the most aggravating factor in the ranking, primarily due to weaknesses in administrative practices and the country's international image.

This year's assessment also highlights deficiencies in Cyprus' basic infrastructure (e.g., energy infrastructure) and weaknesses in the education sector more strongly than in previous years. However, previously identified deficiencies in areas such as technological infrastructure, digital transformation in businesses, and corporate social responsibility appear to be gradually improving.

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).

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

For government efficiency in 2024, Cyprus ranks 28th, rising two ranks compared to 2023. This rise results from improvements in 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), the business legal framework (e.g., legislation on the employment of foreign labor, the threat of business activities from state-owned enterprises), and the social context (e.g., shrinking income of poorer households, gender inequalities).

Despite these deteriorations, 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 were 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, and the country's international image.

In terms of infrastructure, Cyprus ranks 42nd out of 67 countries, the same as in 2023. The biggest deterioration was in the basic infrastructure sub-category, where the country ranks poorly due to issues in the management of water resources and cities, as well as significant deficiencies in energy infrastructure and production.

In 2024, Cyprus recorded an improvement in the technology infrastructure sub-category. Low mobile broadband subscriptions and insufficient cybersecurity appear to be gradually improving, while the country continues to outperform most in exports of information and communication technology (ICT) services.