世界银行-土族塞人经济_2023年5月_在充满挑战的时代航行-财政政策是否有助于减少土族塞人的收入不平等_（英）_52页_2mb

Turkish Cypriot Economy Analysis Summary

1. Key Macroeconomic Challenges:

• Economic Recovery: The TC economy showed strong recovery post-COVID-19 and post-Ukraine invasion, consolidating in 2022, but has not yet returned to pre-pandemic GDP levels. Growth was driven by increased services, trade, and domestic demand.
• High Inflation: Inflation reached 120.7% yoy in October 2022, exacerbated by energy crisis, supply chain disruptions, high food prices, budget constraints, and Turkish lira depreciation. Core inflation also increased significantly, indicating persistent inflationary pressures.
• Fiscal and External Balances: Public spending in 2022 reached TL 20 billion, with transfers (40%) and wages (39%) being the dominant components. Revenues were boosted by indirect taxes. The current account deficit (excluding grants) remained elevated at around 4% of GDP.
• External Vulnerabilities: The economy remains dependent on imports, limiting export benefits from currency depreciation. Trade relationships are impacted by supply chain disruptions from the 2023 earthquakes in Türkiye and Syria.

2. Fiscal Policy and Inequality in the TCc:

• The fiscal system moderately reduces overall inequality, with the Gini coefficient decreasing from 0.445 to 0.361 after fiscal interventions. However, transfers are insufficient to offset indirect taxes' regressive impact.
• Poverty Issue: Poverty increased from 21.8% to 25.5% net of fiscal cash flows. Direct transfers reduce inequality, and social assistance (SA) coverage expanded significantly.
• Distributional Impacts:
  • Direct taxes and transfers are moderately progressive with limited equalizing effect.
  • Indirect taxes are regressive, contributing 37% of revenue but negatively impacting poor households.
• Recommendations: Increase progressive tax base, enhance cash transfer adequacy, reduce regressive elements in the system, and invest in human capital.

3. Structural and Policy Recommendations:

• Maintain emergency support while building resilience through reforms.
• Strengthen energy security by boosting renewable energy investments and increasing energy efficiency.
• Enhance disaster preparedness and climate resilience through better risk management.
• Prioritize human capital investments to address pandemic-induced losses, enhance competitiveness, and promote inclusive growth.

4. Summary of Findings:

• The Turkish Cypriot economy displays strong but constrained recovery potential amidst overlapping crises, high inflation, and external vulnerabilities.
• Fiscal policy has a limited impact on reducing income inequality primarily due to regressive indirect taxes and low transfer adequacy. Existing policies contribute to moderate inequality reduction but not poverty alleviation.
• Structural reforms are critical for enhancing resilience, strengthening fiscal sustainability, and integrating the economy into global value chains to improve long-term growth prospects.