he
Cyprus Government and the northern Turkish Cypriot-administered
area. The Greek Cypriot economy is prosperous but highly susceptible
to external shocks. Erratic growth rates in the 1990s reflect the
economy's vulnerability to swings in tourist arrivals, caused by
political instability on the island and fluctuations in economic
conditions in Western Europe. Economic policy in the south is
focused on meeting the criteria for admission to the EU. As in the
Turkish sector, water shortage is a growing problem, and several
desalination plants are planned. The Turkish Cypriot economy has
about one-fifth the population and one-third the per capita GDP of
the south. Because it is recognized only by Turkey, it has had much
difficulty arranging foreign financing, and foreign firms have
hesitated to invest there. The economy remains heavily dependent on
agriculture and government service, which together employ about half
of the work force. Moreover, the small, vulnerable economy has
suffered because the Turkish lira is legal tender. To compensate for
the economy's weakness, Turkey provides direct and indirect aid to
nearly every sector, e.g. tourism, education, and industry.

GDP: purchasing power parity--$10 billion (1997 est.)

GDP--real growth rate: 2.3% (1997 est.)

GDP--per capita: purchasing power parity?$13,000 (1997 est.)

GDP--composition by sector: Greek Cypriot area: agriculture 4.4%;
industry 22.4%; services 73.2% (1996); Turkish Cypriot area:
agriculture 10%; industry 24.6%; services 65.4% (1995)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): Greek Cypriot area: 2.3% (1998
est.); Turkish Cypriot area: 87.5% (1997 est.)

Labor force: Greek Cypriot area: 299,700; Turkish Cypriot area:
76,500 (1996)

Labor force--by occupation: Greek Cypriot area: services 62%,
industry 25%, agriculture 13% (1995); Turkish Cypriot area: services
66%, industry 11%, agriculture 23% (1995)

Unemployment rate: Greek Cypriot area: 3.3% (1998 est.); Turkish
Cypriot area: 6.4% (1996)

Budget:
revenues: Greek Cypriot area--$2.9 billion, Turkish Cypriot area--$171
million
expenditures: Greek Cypriot area--$3.4 billion, including capital
expenditures of $345 million, Turkish Cypriot area--$306 million,
including capital expenditures of $56.8 million (1997 e