Breaking news

Fitch Upgrades Cyprus’s Credit Rating to ‘A-‘ from ‘BBB+’

by THEFUTURE.TEAM

December 9, 2024

Fitch Ratings has upgraded Cyprus’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from ‘BBB+’ to ‘A-‘, citing significant progress in debt reduction, robust fiscal performance, and strong economic growth. The upgrade reflects a series of key rating drivers that underscore the country’s financial stability and growth prospects.

Sharp Decline in Debt-to-GDP Ratio

A standout factor in the upgrade is Cyprus’s remarkable reduction in its debt-to-GDP ratio. Fitch highlighted that Cyprus has achieved “one of the sharpest declines in public debt/GDP among Fitch-rated sovereigns in recent years.” Public debt is projected to fall from a peak of 113.5% in 2020 to 65.5% in 2024, with further reductions to 60% in 2025 and 55.1% in 2026. This trend would position Cyprus well below the current eurozone average of 89% and in line with the ‘A’-median ratio.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

Driving this debt reduction is a combination of factors, including high primary fiscal surpluses, sustained nominal GDP growth, and stable interest rate costs. Fitch forecasts an average primary surplus of 4.8% of GDP for the period 2024-2026, with the general government surplus expected to reach 3.9% of GDP in 2024.

Consistent Fiscal Discipline

Fitch acknowledged Cyprus’s consistent outperformance in fiscal results, which have regularly exceeded prior forecasts. Revenue growth, fuelled by strong employment gains and enhanced tax collection, has been a key contributor. Fitch projects a gradual decline in fiscal surpluses, averaging 2.9% in 2025-2026, but this still surpasses the projected ‘A’ median deficit of 2.7%.

Another crucial factor is Cyprus’s commitment to prudent fiscal policies, with support from across the political spectrum. This commitment includes a focus on debt reduction, increased revenue-raising capacity, and the maintenance of substantial cash reserves, which are expected to average 12% of GDP over the forecast period. Efforts to address long-term structural issues, such as financing the social security system, could further mitigate future fiscal risks.

Solid Economic Growth Outlook

Cyprus’s economic outlook remains positive, with Fitch forecasting GDP growth of 3.8% in 2024 and an average of 3.1% over the forecast period. Growth will be driven by high-performing sectors, notably information and communication technology (ICT) and financial services, which are known for their high productivity.

Unemployment is also on a steady downward trajectory. Fitch expects the unemployment rate to drop to 4.6% by 2026, a sharp decline from its peak of 16.1% in 2014.

Banking Sector Resilience

Cyprus’s banking sector has continued to strengthen, with Fitch highlighting improvements in solvency, liquidity, and profitability. Benefiting from higher interest rates and a favourable macroeconomic environment, banks have seen a reduction in non-performing loans (NPLs) — now at 7% as of the first half of 2024, down from 7.9% at the end of 2023. While still above the EU average, the drop was achieved organically rather than through asset sales, signalling long-term financial stability.

Fitch noted that improvements in the banking sector have reduced risks to macroeconomic stability and lowered the likelihood of contingent liabilities for the government. However, some legacy challenges within the sector remain and will need to be addressed in the medium term.

What the Upgrade Means for Cyprus

The Fitch upgrade to ‘A-‘ reflects growing international confidence in Cyprus’s fiscal and economic outlook. The country’s ability to reduce debt, maintain strong fiscal surpluses, and enhance banking sector stability all contributed to the rating uplift. This enhanced rating positions Cyprus more favourably in global financial markets, potentially reducing borrowing costs and attracting further investment.

As Cyprus continues to make progress on its economic and fiscal targets, it is well-placed to sustain its role as a regional financial hub, offering strong growth prospects and financial stability for investors and stakeholders alike.

The Decline Of Smartwatches: A Turning Point In The Wearable Tech Industry

by THEFUTURE.TEAM

March 13, 2025

For the first time in history, the smartwatch market is facing a significant downturn. Shipments are expected to drop by 7% in 2024, marking a major shift in a segment that has been growing steadily for over a decade. A report by Counterpoint reveals that while Apple still holds the top spot, its dominance is being challenged by a surge from Chinese brands like Huawei, Xiaomi, and BBK. Even as the overall market struggles, some companies are thriving.

The Big Picture: Why Smartwatches Are Slowing Down

Apple’s flagship products have long been the driving force in the smartwatch market, but even the tech giant is feeling the pressure. The company’s shipments are projected to fall by 19% this year, though it will remain the market leader. Meanwhile, brands from China are capitalizing on the shift, with Huawei showing an impressive 35% growth in sales, driven by the booming domestic market and a broad range of offerings, including smartwatches for kids.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

Xiaomi, too, is experiencing remarkable success, with a staggering 135% increase in sales. In contrast, Samsung is seeing more modest growth, up 3%, thanks to its latest Galaxy Watch 7 and Galaxy Watch Ultra series.

While some companies are succeeding, the broader market is facing headwinds. The biggest factor behind the overall decline is the slowdown in India, where consumer demand for smartwatches has stagnated. The segment is suffering from a lack of innovation and fresh updates, leaving many consumers with little incentive to upgrade their devices. Add to that market saturation, and it’s clear why many users are content with their current models. The Chinese market, however, is bucking the trend, showing 6% growth in 2024.

A Glimpse Into The Future

Looking ahead, the smartwatch market may begin to recover in 2025, driven by the increasing integration of AI and advanced health monitoring tools. As these technologies evolve, the industry could see a resurgence in demand.

Huawei’s Remarkable Comeback

Huawei’s impressive performance in the smartwatch space signals a broader recovery for the company, which has been hit hard by US sanctions. Once the world’s largest smartphone maker, Huawei’s business was decimated when it lost access to advanced chips and Google’s Android operating system in 2019. But in China, Huawei has maintained its dominance, with its market share growing to 17% in 2024.

This resurgence was partly driven by the launch of the Mate 60 Pro, a smartphone featuring a 7-nanometer chip developed in China. Despite US sanctions, the device surprised many with its capabilities, a testament to China’s rising investment in domestic semiconductor production.

In February, Huawei also unveiled its Mate XT foldable smartphone, the world’s first device to fold in three directions. Running on HarmonyOS 4.2, Huawei’s proprietary operating system, the phone further demonstrates the company’s resilience and ability to innovate despite international challenges.

Huawei’s smartwatch offerings are also catching attention, particularly the Huawei Watch GT 5 Pro, which launched in September of last year. With a premium titanium alloy design, a high-resolution AMOLED display, and impressive health tracking features, the GT 5 Pro has become a standout in the market, available to both Android and iOS users.

A Brief History Of The Smartwatch Revolution

The smartwatch market has had its fair share of milestones, but the real breakthrough came in 2012 with the Pebble, a Kickstarter-funded project that raised over $10 million. Pebble introduced the world to smartphone integration, app downloads, and long battery life, becoming the first truly mass-market smartwatch.

In 2013, Samsung entered the game with the Galaxy Gear, marking its first attempt at wearable tech. But it was Apple’s entry in 2014 that truly set the industry on fire. The Apple Watch’s sleek design, integration with iOS, and emphasis on health and fitness catapulted it to the top of the market, establishing a standard that many other brands would try to follow.

By 2021, the smartwatch industry had grown to over $30 billion in revenue, with annual growth reaching 20%. Yet now, it finds itself at a crossroads, with innovation stagnating and market saturation taking a toll.