Cyprus recorded a general government surplus of €1.61 billion in the first nine months of 2026, equal to 4.0% of gross domestic product, as revenue growth outpaced the rise in public spending. Higher receipts from income taxes, social contributions and value-added tax (VAT) drove the improvement, while lower capital expenditure helped restrain spending.

Preliminary figures released Tuesday by the Statistical Service of Cyprus show the surplus rose to €1.17 billion, or 3.0% of GDP, up from € 442.1 million in the same period of 2025.

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Total government revenue increased 6.5% to €12.09 billion, while expenditure rose 2.9% to €10.48 billion.

Key Fiscal Measure	January–September 2025	January–September 2026
Total revenue	€11,353.9 million	€12,091.8 million
Total expenditure	€10,186.2 million	€10,482.1 million
Government surplus	€1,167.6 million	€1,609.7 million
Surplus as a share of GDP	3.0%	4.0%

Income Taxes And VAT Lead Revenue Growth

Taxes on income and wealth made the largest contribution to the increase in revenue. Receipts in this category climbed by €442.2 million, or 15.3%, to €3.34 billion, compared with €2.89 billion a year earlier.

Social contributions rose by €235 million, or 6.6%, to €3.78 billion. Taxes on production and imports increased by €251.5 million, or 7.2%, reaching €3.77 billion.

Net VAT receipts, after refunds, totalled €2.64 billion, up €293.1 million, or 12.5%, from €2.35 billion in the first nine months of 2025.

Some Revenue Streams Decline

Not all revenue categories moved higher. Capital transfers fell by €74.6 million to €96.7 million, while current transfers declined by €71.6 million, or 20.5%, to €278.2 million.

Revenue from services slipped 1.0% to €743.5 million. Interest and dividend receipts dropped by €37 million, or 28.6%, to €92.4 million.

Social Benefits And Personnel Costs Increase

On the expenditure side, social benefits rose by €199.6 million, or 4.9%, to €4.27 billion. Compensation of employees—which includes imputed social contributions and public-sector pensions—increased by €108.3 million, or 3.8%, to €2.99 billion.

Intermediate consumption, covering goods and services used in the delivery of public services, rose by €114.3 million, or 11.0%, to €1.16 billion. Interest payments increased by €8.7 million, or 2.6%, to €340.7 million. Current transfers were up €68.7 million, or 10.6%, at €714.7 million.

Lower Capital Spending Limits Expenditure Growth

The overall increase in spending was tempered by a decline in capital expenditure. Capital-account spending fell by €189.9 million, or 16.9%, to €936.2 million from €1.13 billion in the same period last year.

Investment in fixed capital declined by €94.1 million, or 12.1%, to €686.4 million. Other capital transfers fell by €95.8 million, or 27.7%, to €249.8 million. Subsidies also decreased, dropping by €13.9 million, or 15.5%, to €75.8 million.

South Korea’s defense companies became major beneficiaries of a global rearmament wave. Now, as their share prices retreat and warfare evolves, investors are weighing a tougher question: Can the country’s established weapons makers adapt to a battlefield increasingly shaped by drones, artificial intelligence and air defense?

Russia’s invasion of Ukraine accelerated military spending across Europe, creating demand for South Korean tanks, artillery and missile systems. Buyers were drawn to the country’s combination of competitive pricing and relatively fast delivery. But the rally has reversed sharply. The combined market value of Hanwha Aerospace, LIG D&A, Hyundai Rotem and Korea Aerospace Industries fell to about 62 trillion won ($46.18 billion) at the end of October, down from a 52-week peak of 170 trillion won, according to South Korean broadcaster SBS.

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Changing Technology, Changing Procurement

The decline has sharpened scrutiny of whether companies known for conventional platforms are positioned for a more technologically diverse conflict. The war in Ukraine has demonstrated how comparatively inexpensive drones can threaten costly military equipment. Drone attacks from Iran have also depleted stocks of expensive air-defense missiles used by the U.S. and Gulf allies.

“Modern warfare is being fought with less traditional weaponry” than tanks, cannons and armored vehicles, said Peter Kim, senior managing director at KB Securities. He noted that China’s dominance in drones has made it difficult for potential competitors in Europe, the U.S. and Asia to compete on price.

KJ Hwang, a Korea autos and industrials analyst at Bank of America, said procurement priorities are shifting toward drones, counter-drone systems and air defense. The implication for investors is not necessarily that conventional weapons are becoming obsolete. Rather, defense companies may need to broaden their portfolios as governments balance established platforms with newer technologies.

Why Shares Have Come Under Pressure

The move lower reflects more than changing battlefield requirements. Investors are also contending with weaker-than-expected earnings, a stronger won, delayed export orders and high valuations that had priced in substantial growth.

Kim said money flowing into South Korean semiconductor stocks has added pressure to defense shares. He also pointed to delays in converting government spending pledges into approved budgets and firm orders—a reminder that announced defense ambitions do not always translate quickly into company revenue.

Recent results have reinforced investor caution. Hanwha Aerospace’s third-quarter operating profit fell more than 46% from a year earlier, with the company citing delivery-schedule adjustments and one-off costs. Its shares have declined more than 28% this year. Hyundai Rotem reported an operating-profit decline of more than 11.1%, while its stock has fallen almost 60%.

Korea Aerospace Industries has been more resilient. Its third-quarter sales rose about 52% and operating profit increased roughly 32%, limiting its share-price decline to just over 8% this year.

Export Orders Still Support the Long-Term Case

Despite the near-term setbacks, analysts see continued demand for South Korean systems. Hwang said companies are expanding cooperation with partners in Western Europe and the Middle East, including in air defense. Orders for K9 self-propelled howitzers, he added, point to the continued importance of deterrence and the constraints facing global suppliers.

Recent contracts offer evidence that export opportunities remain active. Hanwha Aerospace has secured K9 howitzer orders in Europe, including a contract valued at about 546 million euros, and a $922 million order from Norway for K239 Chunmoo multiple rocket-launcher systems. LIG D&A has also signed a $94 million agreement with Malaysia for its K-SAAM naval surface-to-air guided missile system, its first export deal for the platform.

Conventional weapons continue to matter because militaries need capabilities that can deter an attack and operate across a range of conditions. David Roche, a strategist at Quantum Strategy, told CNBC that major powers are placing greater emphasis on AI and drones as they absorb lessons from Ukraine. But, he noted, drones cannot capture and hold terrain: In mobile conflicts, infantry, tanks and armored vehicles remain essential.

Adaptation Will Determine What Comes Next

South Korean defense companies are investing in drones and unmanned systems, but building a successful product is only part of the challenge. Overseas customers typically want evidence that equipment has performed reliably in real-world operations, which can make it difficult for new systems to win exports quickly.

That creates a transition period for the sector. Established platforms may continue to generate demand, while newer technologies become increasingly important to future procurement. Kim said the sector remains attractive over the long term, with growth prospects still in the teens, even as investors reassess valuations and the timing of orders.

For South Korea’s defense industry, the central question is therefore not whether drones will replace tanks and artillery. It is whether companies can combine proven conventional systems with the technologies modern militaries increasingly require—and do so at a price and pace that keeps them competitive.

Overview

Unicorn Pitches Limassol will take place on Tuesday, 24 November 2026, bringing ten selected AI startups together to compete for a place at a future Unicorn Event in San Francisco.

This year’s theme is “AI Revolution: From Vision to Reality.” The event will take place at the Cyprus University of Technology (CUT) in Limassol, combining a startup pitch competition with hands-on AI workshops, an industry panel and opportunities for entrepreneurs to meet potential investors.

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The programme begins at 15:00, with workshops scheduled for the afternoon and the main pitch competition taking place in the evening.

Organised with the involvement of Cyprus Valley and Network VC, the event is aimed at startup founders, investors, business leaders and professionals interested in the commercial applications of artificial intelligence.

Ten AI Startups To Pitch For Investors

The central event will feature ten selected startups presenting their businesses to a jury of venture capital professionals.

Each startup will have three minutes to pitch its technology, business model, and growth potential. The presentations will be followed by questions and feedback from the judging panel.

The jury will evaluate the competing companies through electronic voting, with the winner securing a place at a Unicorn Event in San Francisco.

For participating founders, the competition offers an opportunity to present their businesses to investors, receive feedback and establish connections with potential financial and strategic partners.

The organisers have not yet published the full list of participating startups.

AI Workshops And Programme

Before the pitch competition, the event will host two hands-on workshops for entrepreneurs interested in integrating artificial intelligence into their businesses.

Scheduled from 15:15 to 18:00, the workshops will focus on AI business models, the use of AI in company operations, and how founders can incorporate AI into their decision-making.

The programme will also include an investor-startup speed dating session, giving founders opportunities to meet venture capital representatives and discuss their businesses.

An industry panel will examine developments in artificial intelligence and venture capital, followed by the startup competition and an announcement of the winners.

The published agenda includes the following key activities:

• 15:00–15:15: Registration and arrivals
• 15:15–18:00: Two AI workshops for founders
• Early evening: Investor-startup speed dating
• 18:30 onwards: Opening remarks, industry panel and competition introductions
• 19:40–20:40: Live startup pitches
• 20:40–21:00: Jury voting and winner announcement
• 21:00–22:30: Networking and refreshments

Who Should Attend

Unicorn Pitches Limassol is aimed at startup founders, entrepreneurs, venture capitalists, angel investors and business professionals interested in artificial intelligence and emerging technologies.

The workshops may be particularly relevant to founders exploring how AI can support business development and operations.

For investors, the competition provides an opportunity to discover early-stage companies, meet their founders and assess potential investment opportunities.

The event also welcomes professionals and students interested in entrepreneurship and the application of AI in business.

Date, Venue And Registration

Date: Tuesday, 24 November 2026

Time: From 15:00, with evening networking scheduled until 22:30

Venue: CUT Tassos Papadopoulos Building, Themidos 1, 3036 Limassol

Format: In person

Registration: Unicorn Pitches Limassol on Luma

Startups interested in competing can find application information through the official Unicorn Pitches event page. Purchasing a startup ticket does not itself guarantee selection to pitch.

The registration page also lists a separate free 5 km networking run along the Limassol seafront on the morning of 24 November, followed by coffee and networking.

About Unicorn Events

Unicorn Events operates an international startup pitch competition connecting founders with venture capital firms, business angels and corporate investors.

Its events include local Unicorn Pitches competitions, international Unicorn Battles and the Unicorn CUP world finals.

The programme gives participating startups opportunities to present their businesses to investors, receive feedback and establish international connections.

The Limassol event forms part of this wider competition network, with its winning startup offered the opportunity to participate in a subsequent event in San Francisco.

Further details are available at unicorn.events.

University students across Cyprus will compete in the 2026–27 CFA Society Cyprus Research Challenge, analysing listed technology group Logicom Public Ltd as this year’s subject company.

The competition officially launched on October 29 at Eurobank Cyprus’s head office in Nicosia, bringing together university teams, faculty advisers, industry mentors and Logicom representatives.

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Putting Investment Analysis Into Practice

Organised by the CFA Institute, the annual competition gives students practical experience in equity research and investment analysis. Participants work in teams to assess a publicly listed company, prepare a research report and present their findings to a panel of industry professionals.

Over the coming months, teams will analyse Logicom’s business model, financial performance and future prospects, supported by faculty advisers and mentors holding the Chartered Financial Analyst (CFA) designation. Their reports must include a buy, sell or hold recommendation.

The local final is scheduled for February 2027, with the winning team going on to represent Cyprus at the regional stage.

Developing Skills And Industry Connections

Beyond financial analysis and company valuation, the challenge helps students develop research writing, teamwork and presentation skills. Working to real-world deadlines and engaging with senior management also gives participants insight into how investment research is conducted in practice.

CFA Society Cyprus says previous participants have often credited the experience with influencing their career choices. For employers, the competition offers an opportunity to connect with emerging talent in the local financial sector.

The programme also introduces students to the CFA Institute Code of Ethics and Standards of Professional Conduct, highlighting the importance of integrity and professional responsibility in investment research.

Supporting Future Finance Professionals

“The Research Challenge is one of the most valuable experiences we can offer students who are considering a career in investment management,” said Stella Mourouzidou-Damtsa, CFA, University Relations and Research Challenge Committee chair at CFA Society Cyprus.

“It takes them beyond the classroom and asks them to think, analyse and present like professional analysts,” she added.

Mourouzidou-Damtsa also thanked Logicom for participating as this year’s subject company and giving students access to its business. She said she looked forward to seeing the insight and creativity each team would bring to the competition.

CFA Society Cyprus is a non-profit member society of the CFA Institute representing investment professionals in Cyprus. It promotes ethical standards, education and professional excellence through events, educational programmes and initiatives supporting the local investment community.

Eurozone annual inflation accelerated to 4% in October, its highest level since September 2023, as rising energy costs pushed prices further above the European Central Bank’s 2% target.

According to the flash estimate from Eurostat, inflation rose from 3.8% in September, in line with forecasts, while consumer prices increased 0.4% over the month. Core inflation, excluding energy, food, alcohol and tobacco, remained unchanged at 2.5%, suggesting that the latest surge is largely energy-driven.

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Energy Drives Nearly Half Of Inflation

Energy prices increased 20.8% year on year in October, compared with 18.9% in September. The category contributed approximately 1.9 percentage points to the overall 4% inflation rate, accounting for almost half of the increase.

Services inflation edged up to 3.3%, while food, alcohol and tobacco rose to 1.6%. Unprocessed food prices accelerated to 4.6%, indicating that higher costs are also reaching supermarket shelves. Non-energy industrial goods inflation increased slightly to 1.2%.

Cyprus Among Countries With Highest Inflation

Italy recorded the sharpest acceleration, with inflation rising to 5.6% from 4.2%. Lithuania had the highest rate at 6.1%, followed by Bulgaria at 6%. Greece and Italy reached 5.6%, Cyprus 5.4% and Belgium 5.2%.

Inflation increased in 13 of the euro area’s 21 countries, declined in six and remained unchanged in two. Malta recorded the lowest rate at 2.3%, followed by Germany at 2.8%.

Germany’s inflation eased from 3.3% to 2.8%, partly due to a temporary fuel-tax reduction introduced in October. Prices also moderated in Spain and Luxembourg.

ECB Faces Pressure Ahead Of December Meeting

The ECB kept its deposit facility rate at 2.5% on October 29. President Christine Lagarde said policymakers had considered another increase but agreed to wait.

Economists are divided on the outlook. Nicola Nobile of Oxford Economics said October’s figures strengthened the case for a December rate increase, despite modest economic growth in France and Italy.

Claus Vistesen and Melanie Debono of Pantheon Macroeconomics expect a 25-basis-point increase in December and another in March 2027. Their forecasts put inflation at 4.1% in November, 4.3% in December and 4.5% in January.

Prediction markets placed the probability of a December increase at approximately 84%. The ECB’s next meeting on December 16–17 will also include updated economic forecasts. Meanwhile, Lagarde has announced plans to step down in February, ahead of the end of her term.

Markets React To U.S. Midterm Elections

Financial markets focused more on the U.S. midterm elections than on the inflation data. Democrats won control of both chambers of Congress, prompting investors to anticipate constraints on President Donald Trump’s spending plans.

By 11:20 CET, the Euro Stoxx 50 had gained 1.5%, Germany’s DAX 1.1% and Spain’s IBEX 35 2.2%. The euro rose 0.6% to $1.1262, while gold gained 3% to $4,046 an ounce.

With energy accounting for almost half of October’s inflation rate, the ECB’s next challenge is determining whether higher costs will remain concentrated in energy or spread to wages, rents and everyday services. This will shape the scale of any further monetary tightening.

Cyprus plans to ask the cabinet to extend reduced excise duties on motor fuels until March 2027, Finance Minister Makis Keravnos has said, rejecting claims that higher value-added tax (VAT) receipts amount to “inflationary taxation”.

Speaking after a cabinet meeting at the Presidential Palace, Keravnos argued that stronger VAT collections reflect increased consumption and economic resilience rather than a higher effective tax burden. He also pointed to budget surpluses and declining public debt as safeguards against economic and geopolitical shocks.

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Fuel Tax Relief And Rising VAT Revenues

The current reduction in motor-fuel excise duty is due to expire at the end of November. Keravnos said the government would submit a proposal to extend the measure until March 2027.

Addressing criticism over rising VAT receipts, the minister noted that the government had reduced VAT on several categories, including essential goods and energy. Since consumption accounts for a significant share of Cyprus’ economy, stronger spending also generates higher tax revenues.

He added that household consumption is supported by disposable income, which the government seeks to protect through social policies and fiscal support. More than €1 billion has been allocated to cost-of-living measures.

Budget Surplus Provides Room For Further Support

Keravnos welcomed fiscal figures showing the government surplus had reached €1.61 billion, describing the result as evidence of responsible and preventive financial management.

He said budget surpluses and lower public debt help protect Cyprus’ investment-grade credit ratings while providing room to respond to unexpected costs. Recent examples include several million euros in emergency spending on the foot-and-mouth disease outbreak and wildfires in the Limassol district, neither of which had been included in the original budget.

Sound fiscal management also allows Cyprus to access international borrowing markets when needed while remaining within EU economic-governance rules, he added.

Energy Costs Keep Inflation In Focus

The minister acknowledged that the ongoing energy crisis is increasing costs for households and businesses and adding to inflationary pressure. He welcomed the European Central Bank’s decision not to raise interest rates further and said the government was monitoring prices and the cost of living to assess whether additional support might be necessary.

Cyprus is also awaiting the European Commission’s response to its request for a further reduction in the special excise duty on heating oil. Keravnos said initial indications were positive and that the government would continue to press its case.

He argued that EU restrictions on tax measures should take individual countries’ fiscal positions and growth prospects into account, pointing to Cyprus’ forecast economic growth of 3%. “We cannot accept these across-the-board restrictions,” he said.

Government Defends Public Investment Plans

Keravnos rejected claims that public investment and infrastructure spending were being reduced despite higher state revenues. He attributed delays in some projects to inherited problems and said the government was working to move them forward.

Describing the delays as temporary, he said the budget remained focused on economic growth and social policy. Social measures account for 23% of state expenditure, a share he described as unprecedented in previous budgets.

The minister was also due to attend meetings of the Eurogroup and the Economic and Financial Affairs Council (Ecofin), where energy costs and potential support measures were expected to feature on the agenda.

Registered unemployment in Cyprus increased by 9.7% year on year in October, with notable rises in information and communication, administrative and support services, and professional, scientific and technical activities, according to the Cyprus Statistical Service (Cystat).

A total of 7,790 people were registered as unemployed at district labour offices at the end of October, up by 691 from 7,099 a year earlier. However, the monthly figure declined from 8,366 in September.

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Seasonally Adjusted Unemployment Remains Above 2025 Levels

The seasonally adjusted number of registered unemployed edged down to 10,711 in October from 10,741 in September. It nevertheless remained above the 9,731 recorded in October 2025.

The adjusted figure fluctuated throughout the year, rising from 10,096 in January to 10,679 in June before reaching 10,741 in September and easing slightly in October.

Trade And Hospitality Record Highest Numbers

Wholesale and retail trade had the largest number of registered unemployed, at 1,332, compared with 1,324 a year earlier and 1,402 in September.

Accommodation and food services ranked second, with 890 people registered, up from 852 in October 2025. Professional, scientific and technical activities followed with 849, compared with 785 a year earlier.

Public administration and defence, including compulsory social security, recorded 655 unemployed, up from 595 year on year but significantly below September’s 1,050.

Technology And Support Services See Sharpest Annual Increases

Information and communication recorded one of the largest increases, with registered unemployment rising to 565 from 390 a year earlier. Administrative and support services also increased, reaching 466 compared with 362 in October 2025.

Other sectors recording annual increases included manufacturing, at 502 compared with 449; financial and insurance activities, at 399 compared with 358; and education, at 340 compared with 277.

Transportation and storage reached 294, while human health and social work activities recorded 291 registered unemployed.

Unemployment Trends Vary Across Other Sectors

Construction recorded 390 unemployed, slightly below the 392 registered a year earlier. Other service activities rose to 198, while arts, entertainment and recreation increased to 165.

Real estate activities recorded 117 unemployed, compared with 85 in October 2025. Agriculture, forestry and fishing rose slightly to 34, while water supply, sewerage and waste management declined to 18.

Smaller sectors recorded limited changes. Mining and quarrying had six registered unemployed, electricity and gas-related activities five, while activities of households remained unchanged at 10. Extra-territorial organisations and bodies recorded nine.

The number of newcomers registering as unemployed fell to 255 in October, compared with 267 a year earlier and 268 in September.

Women in leadership roles across Cyprus will gather in Nicosia on November 10 to discuss financial empowerment and ways to narrow the financial literacy gap between women and men. The initiative, led by the Central Bank of Cyprus and the Cyprus Financial Literacy and Education Committee (CyFLEC), aims to build confidence in financial decision-making and extend practical knowledge beyond the event itself.

Building Confidence Through Financial Knowledge

Held at The Landmark Nicosia, Autograph Collection, the event, titled “Financial Literacy for Cypriot Women,” will bring together women with influential roles in Cypriot society. Organisers say the gathering will create space for discussion about financial independence, informed decision-making and the practical skills women need to manage their finances with greater confidence.

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Under the theme “Learn, Decide, Progress,” the initiative also seeks to establish a network through which participants can share financial knowledge and experience across their professional, social and local communities. The goal is for attendees to become ambassadors of financial education, encouraging more women to take an active role in financial decisions.

From Discussion To Practical Action

The programme will open with remarks from Central Bank of Cyprus Governor Christodoulos Patsalides, who chairs CyFLEC, and Education Minister Athena Michaelidou, a member of the committee’s board of directors.

Philip Dennis, a professor at Durham University in the United Kingdom, will deliver a keynote address on gender differences in financial decision-making. The programme will then examine the financial literacy gap and the practical steps that could help reduce it.

A roundtable discussion, “Women and Financial Empowerment: The Persistent Gap and How We Can Bridge It,” will be moderated by Pani Karamanou, head of the Central Bank’s Financial Stability and Resolution Directorate-General. Participants will include Gender Equality Commissioner Josie Christodoulou and Financial Commissioner Valentina Georgiadou, who is also a financial literacy ambassador.

Extending The Conversation Beyond Nicosia

For CyFLEC, the event’s value will depend not only on the discussion in the room but also on what participants share afterward. By building a wider network of women equipped to pass on financial knowledge, the organisers hope to support better-informed decisions across communities throughout Cyprus.

Supported by the Moneypedia financial education platform, the event will take place from 10 a.m. to noon on Tuesday, November 10.

Cyprus is seeking to attract more visitors beyond the summer season, but rising aviation fuel prices and warnings of significantly higher airfares in 2027 could make the island a more expensive destination just as tourism revenues begin to weaken.

European aviation fuel prices have more than doubled since the start of 2026, increasing pressure on airlines to pass higher operating costs on to passengers. For Cyprus, where affordable air connections are essential to extending the tourist season, the trend could complicate efforts to attract visitors during the quieter winter months.

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Aviation Fuel Prices Reach New Highs

According to the International Air Transport Association (IATA), the average European aviation fuel price reached $4.84 per gallon in October, up 114% from $2.26 in January and February. Prices peaked at $4.93 per gallon on October 27, the highest monthly level recorded since the Middle East crisis began, according to Eurocontrol.

The European Commission said on October 22 that jet fuel supplies were tight, although Europe was not facing an actual physical shortage. Further disruptions remained a risk.

The timing is particularly challenging as October marks the transition to winter flight schedules, when passenger demand typically softens and airlines have less scope to absorb higher costs.

Airlines Warn Of Higher Ticket Prices

Ryanair chief executive Michael O’Leary has warned that airfares could increase by as much as 20% in 2027, potentially marking the largest annual rise in European aviation history.

The airline’s costs are already increasing. Net profit fell 15% in the first half of its financial year to €2.15 billion, while operating costs rose 10% to €7.69 billion, partly due to higher fuel expenditure.

Ryanair secured fuel at approximately $67 per barrel for this year through advance purchasing, but O’Leary expects prices to double next year as that protection expires. “We guarantee no fuel surcharges, but there is no doubt that air fares are going to rise significantly in 2027 because of much higher oil prices,” he said.

Brent crude closed at $109.86 per barrel on Friday, its highest level since May, before moving above $110 amid concerns over Middle East supplies.

Taxes And Operating Costs Reshape Airline Networks

Fuel is not the only factor affecting airline decisions. In October, Ryanair announced plans to cut 20 routes and more than one million seats from its Belgian winter schedule, reducing operations at Brussels Charleroi and Brussels Zaventem airports by six aircraft.

The airline linked the decision to Belgium’s planned aviation-tax increase, from €2 per ticket in January 2025 to €7 in January 2027. Ryanair estimated the cuts represented a $600 million reduction in investment and argued that higher taxes would make Belgium less competitive.

The carrier has also criticised the EU emissions trading system, arguing that it increases costs for flights within the bloc while flights arriving from outside the EU are exempt. Other airlines, including SAS and easyJet, have also reduced services this year.

Cyprus Tourism Revenues Show Signs Of Weakening

Higher airfares could pose a particular challenge for Cyprus, where ticket prices and connectivity play an important role in attracting visitors outside the summer season.

According to the Cyprus Statistical Service, tourism revenue fell 3.4% year on year in August 2026 to €562 million, while arrivals declined from 602,026 to 581,880.

Revenue for the first eight months of the year reached €2.32 billion, down 6.2% from €2.47 billion in the same period of 2025. This followed a stronger July, when tourism receipts increased 4.6% to €536.5 million.

Average spending per tourist was almost unchanged in August at €965.81, compared with €966.41 a year earlier. However, the average stay shortened from 9.2 to 8.9 days, while daily spending increased from €105.04 to €108.52.

The UK remained the largest source market, accounting for 30.5% of arrivals, followed by Israel at 23.3% and Poland at 6.3%. British arrivals fell to 177,603 from 193,091 a year earlier.

Global Air Travel Demand Remains Uneven

IATA’s September 2026 data showed global passenger demand declining 0.5% year on year, while available seat capacity fell 0.2%. International demand increased 0.4%, or 1.7% excluding the Middle East.

The global passenger load factor stood at 83.2%, down 0.3 percentage points from September 2025. IATA senior vice-president for sustainability and chief economist Marie Owens Thomsen attributed the decline to weakness in the Middle East and North America, while noting that most international markets had returned to growth.

Geopolitical uncertainty and volatile fuel prices are expected to continue influencing the market. In Europe, seasonal weakness was already visible: Eurocontrol data showed Greek flights declining 7% week on week during October 19–25, compared with an average 2.3% fall across Europe.

Keeping Cyprus Competitive Beyond Summer

For Cyprus, higher airfares, softer seasonal demand and declining tourism revenue pose a challenge to its ambitions to develop year-round tourism.

More expensive flights could make winter holidays less attractive, particularly for travellers sensitive to the overall cost of a trip. Maintaining airline connections will therefore not be enough on its own. Cyprus must also remain competitively priced as airlines reassess routes and passengers face higher travel costs.

Cyprus has deployed approximately €1 billion through five support packages since 2023 to ease the impact of rising prices, Finance Minister Makis Keravnos said. The measures include tax relief, expanded child-benefit eligibility and support aimed at protecting household disposable income.

In a statement published on the government’s social media channels, Keravnos said the country’s economic resilience and strong fiscal position had enabled the government to return part of the benefits of economic growth to households and small businesses.

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Tax Reform Boosts Household Income

Tax reform introduced in January has increased disposable income for approximately 200,000 people, according to the minister. More than 50,000 people are now exempt from income tax.

Additional relief includes deductions for rent or mortgage interest on a primary residence, as well as investments in energy-efficient and other green home improvements.

Higher Tax Deductions And Child Benefits

Families are eligible for additional tax deductions based on the number of children:

• €1,000 for the first child
• €1,250 for the second child
• €1,500 for the third and each subsequent child

Income thresholds for child benefit have also increased to €90,000 for families with three children and €100,000 for those with four. Households with five or more children are no longer subject to income criteria for the benefit, Keravnos said.

Imported Inflation Continues To Pressure Households

Keravnos attributed much of the cost-of-living pressure to imported inflation, partly driven by an energy crisis linked to armed conflicts. He said government policy focuses on protecting the disposable income of workers, vulnerable groups and households.

The minister has also highlighted the resilience of Cyprus’ economy while calling for greater flexibility and less bureaucracy across the European Union.

Fiscal Surpluses Support Government Measures

The government’s ability to assist households and small businesses is underpinned by economic resilience and disciplined fiscal management, Keravnos said. Budget surpluses and declining public debt allow the state to meet its borrowing obligations while directing part of the gains from economic growth back to society.

“We support society because our economy allows us to,” the minister said, adding that protecting the most vulnerable remains a priority.

Further details on the support measures are available at se-afora.gov.cy.