Cyprus’ current account deficit widened sharply in 2025 and continued to deteriorate in the first half of 2026, despite ongoing economic growth, according to Eurobank Research.
Revised figures from the Central Bank of Cyprus put the 2025 deficit at 8.8% of GDP, up from the previous estimate of 6.4%. Meanwhile, the 2024 figure was revised down from 8.2% to 5.5%, reversing the earlier impression that Cyprus’ external position was improving.
Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram
Deficit Reaches €3.21 Billion In 2025
Following the revisions, the 2025 current account deficit increased by €870 million to €3.21 billion.
The largest adjustment came from primary income, where the estimated deficit rose by €1.42 billion, mainly reflecting net investment income. The goods trade deficit was revised upwards by €201 million, while net current transfers abroad increased by €108 million.
These changes were partly offset by an €855 million upward revision to the services surplus, largely driven by higher estimated earnings from telecommunications, computer and information services.
External Pressures Intensify In 2026
Cyprus’ current account deficit reached €2.42 billion in the first half of 2026, equivalent to 12.8% of GDP for the period, compared with 10.1% a year earlier. The deficit widened by €635 million, with most of the increase recorded in the second quarter.
The goods trade deficit grew by €441 million, while the services surplus declined by €432 million as payments for imported services increased faster than export earnings.
Surpluses in telecommunications, computer and information services fell by €212 million, while travel and financial services recorded declines of €183 million and €230 million, respectively. Higher earnings from intellectual property and other business services, alongside a €333 million improvement in primary income, partly offset the deterioration. Secondary income weakened by €94 million.
Imports And Tourism Add To The Pressure
Strong household consumption and business investment contributed to rising imports. Transport equipment and parts accounted for approximately 77% of the increase in goods imports during the first half of 2026.
Although such investment can support future productive capacity, its longer-term benefits depend on whether it generates additional output and income.
Tourism also provided less support. Revenues fell 6.2% year on year to €2.32 billion between January and August. After increasing by 4.6% in July, receipts declined by 3.4% in August, mainly due to fewer visitors.
Preliminary figures also showed a further widening of the goods trade deficit in July and August.
IMF Forecast Faces Upside Risk
The International Monetary Fund’s October 2026 World Economic Outlook projected a current account deficit of 7.7% of GDP for Cyprus in 2026, based on data available before the latest revisions.
Eurobank Research warned that the updated figures create a significant risk of the deficit exceeding that forecast.
However, the report stresses that the imbalance should be assessed in context. International businesses contribute to exports and employment, while profits transferred to foreign investors affect the income balance. Domestic consumption and investment also increase demand for imports.
How the deficit is financed and whether current investment generates future income remain important considerations.
Strengthening Cyprus’ External Position
Eurobank Research identifies several priorities for improving the country’s external balance, including expanding export markets, developing new products and services, and strengthening the skills of domestic businesses.
Closer links between local suppliers and international companies operating in Cyprus could also help distribute the benefits of growth more widely across the economy.
Other priorities include reducing dependence on imported energy through renewable investment and efficiency improvements, strengthening financial literacy and household saving, and improving access to business financing.
Together, these measures could gradually narrow the external deficit, strengthen Cyprus’ export capacity and support more resilient, sustainable economic growth.







