Republic of Cyprus Second Voluntary National Report - Sustainable development goals

28 8. FOCUS AREAS Cyprus continues to work towards promoting sustainable development, through focusing on social inclusion, stimulating innovation and accelerating digitalisation, as well as working towards green transition and reversing the effects of climate change. Adhering to the leaving no one behind principle, the Government of Cyprus has implemented a set of key initiatives. ECONOMIC DEVELOPMENT— DIGITALISATION AND INNOVATION A NEW GROWTH MODEL TOWARDS LONG-TERM SUSTAINABILITY OF THE CYPRUS ECONOMY The need for establishing a long-term strategy and addressing the resilience and sustainability of Cyprus’ economy has been identified and the new Economic Model is now being formulated. The choice of a new growth strategy is particularly pertinent during the current – exogenous – crisis, as the country is faced with the challenge of socio-economic recovery from the COVID-19 pandemic and the need for resilience against unprecedented shocks is clear. The new Long-Term Economic Strategy (LTES) aspires to transform Cyprus into the “Sustainable Business and Trade Centre of Europe”. Whilst the new growth model will remain consistent with and leverage upon the existing strengths of Cyprus in services and its role as a business hub, the aim is to strengthen the economy’s competitive advantages with a strong focus on sustainability and digitalisation, whilst also setting a high priority on the diversification of the economy, aiming at enhanced resilience. Achieving the new growth vision will involve a coordinated drive of initiatives to fix and build across the economy and sectors. Cyprus will actively encourage the growth of the green economy by improving its energy mix, reducing reliance on fossil fuels, and thus, reducing the carbon footprint, and promoting the circular economy. Digitalisation will underpin the new growth model as a critical horizontal enabler of long-term growth. Cyprus will utilise innovations in its relatively strong and growing Information and Communications Technology (ICT) sector to expand the added value of its wider suite of professional services (such as consulting, engineering, and shipping), but also the tertiary education and health services sectors. At the same time, strengthening competitiveness and improving sustainability in the primary and secondary sectors of the economy will be pursued, aiming at enhancing their growth potential. Enhanced diversification and rendering Cyprus more resilient and less exposed to external shocks will be the ultimate goal. Enhancing the tourism sector via diversification of the tourism product and promotion of sustainable tourism is also set as priority under the LTES. The lack of diversification in the number of countries traveling to Cyprus exposes the country to a demand shock due to economic, social and political developments. The COVID-19 pandemic is a striking example of this. In addition to this, reliance on the “sun and sea” model, as the main offering, results in overcrowding during peak periods and an underuse of tourism infrastructure in off-peak periods. Overexploitation of attractions and oversaturation of tourist areas and peaks of demand for water and energy, combined with Cyprus’ poor water and waste management and reliance on fossil fuels are reducing the sustainability of the tourism sector. The LTES points out the need for decisive efforts to shift towards eco-friendly tourism services and to limit the flow of investment in accommodation and infrastructure, in order to address the risk of losing the sector’s appeal and profitability. Developing a strong agritourism and sustainable hospitality infrastructure and attracting health and wellness tourists through a competitive and reputable healthcare system falling under the scope of sustainable tourism, are identified as one of the drivers of future growth.