The Cypriot economy is prosperous and has diversified in recent years. According to the latest IMF estimates, its per capita GDP (adjusted for purchasing power) is, at $28,381, just above the average of the European Union. Cyprus has been sought as a base for several offshore businesses for its highly developed infrastructure.
Economic policy of the Cyprus government has focused on meeting the criteria for admission to the European Union. Adoption of the euro as a national currency is required of all new countries joining the European Union, and the Cypriot government adopted the currency on 1 January 2008. Oil has recently been discovered in the seabed between Cyprus and Egypt, and talks are underway between Lebanon and Egypt to reach an agreement regarding the exploration of these resources. The seabed separating Lebanon and Cyprus is believed to hold significant quantities of crude oil and natural gas.
The economy of the Turkish-occupied area is dominated by the services sector, including the public sector, trade, tourism and education, with smaller agriculture and light manufacturing sectors. The economy operates on a free-market basis, although it continues to be handicapped by the political isolation of Turkish Cypriots, the lack of private and governmental investment, high freight costs, and shortages of skilled labor. Despite these constraints, the economy turned in an impressive performance in 2003 and 2004, with growth rates of 9.6% and 11.4%.
The average income in the area is $5,000 per capita, and the Turkish government has pledged to increase this to $12,000 through investment and aid. Growth has been buoyed by the relative stability of the Turkish new lira and by a boom in the education and construction sectors. The island has witnessed a massive growth in tourism over the years and as such the property rental market in Cyprus has grown along side. Added to this is the capital growth in property that has been created from the demand of incoming investors and property buyers to the island.