Over the first seven months of 2026, Cyprus’ industrial price index increased 1.3% compared with the same period in 2025.

Electricity Drives The Monthly Advance

On a month-on-month basis, electricity supply recorded the sharpest increase among the main industrial sectors, with prices rising 9.9%. Manufacturing prices increased 0.2%, as did water supply and materials recovery, while mining and quarrying were unchanged.

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Local-market prices rose 2.3% from June to 130.8 points, while the export market index fell 0.3% to 114.9 points.

Annual Gains Widespread Across Sectors

All four major industrial sectors recorded higher prices in July than a year earlier. Electricity supply led with a 14% increase, followed by water supply and materials recovery at 5.6%, manufacturing at 2.1% and mining and quarrying at 1.6%.

Local-market prices rose 4.6% year over year, while export prices increased 3.3%.

Seven-Month Growth Remains Moderate

From January through July, water supply and materials recovery posted the strongest sectoral increase, at 3.1%. Mining and quarrying rose 2.9%, manufacturing 1.4% and electricity supply 0.7%.

The export market index increased 2.5% over the period, compared with 1.1% growth for the local market index.

Manufacturing Trends Vary By Segment

Electronic and optical products and electrical equipment recorded the largest annual manufacturing price increase, at 11%, followed by basic metals and fabricated metal products at 5.6%. Furniture, other manufacturing, and machinery repair and installation rose 5.2%, while wood products increased 4.3%.

Machinery, motor vehicles and other transport equipment gained 3.2%, other non-metallic mineral products rose 2.1%, and refined petroleum, chemical and pharmaceutical products increased 1.5%. Food, beverages and tobacco declined 0.1%, while textiles, clothing and leather products were unchanged.

Monthly Manufacturing Trends Remain Mixed

Basic metals and fabricated metal products recorded the strongest monthly increase, at 0.6%. Other non-metallic mineral products and machinery, motor vehicles and other transport equipment rose 0.5%, while refined petroleum, chemical and pharmaceutical products increased 0.4%.

Furniture, other manufacturing, and machinery repair and installation recorded the largest monthly decline, at 0.3%. Food, beverages and tobacco and paper products and printing fell 0.1%, while several other segments posted smaller increases or were unchanged.

First Seven Months Show Uneven Sectoral Performance

Electronic, optical and electrical equipment recorded the largest increase during the first seven months, at 6.8%, followed by furniture, other manufacturing, and machinery repair and installation at 5.6%. Wood products rose 2.5%, basic metals and fabricated metal products 2.3%, and machinery, motor vehicles and other transport equipment 1.9%.

Other non-metallic mineral products increased 1.3%, refined petroleum, chemical and pharmaceutical products 0.8%, and rubber and plastic products 0.6%. Food, beverages and tobacco and paper products and printing each rose 0.2%, while textiles, clothing and leather products increased 0.1%.

The increase reflected an additional €354.1 million in revenue over the period. Taxes on income and wealth provided one of the largest contributions, rising 7.7% to €2.19 billion from €2.03 billion and adding €157.5 million.

Social contributions also increased 7.5%, reaching €2.98 billion from €2.77 billion, an increase of €207.2 million. Revenue from taxes on production and imports rose 8.1% to €2.9 billion from €2.69 billion, with net VAT providing the largest increase. VAT revenue climbed 14.7% to €2.03 billion from €1.77 billion, up €259.5 million.

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Several Revenue Lines Weaken

Other revenue categories declined during the period. Capital transfers fell €93.1 million to €19.6 million from €112.7 million a year earlier, while revenue from the sale of goods and services dropped 7.3% to €572.4 million.

Property income declined 29.4% to €79.9 million, and current transfers fell 24.7% to €172.8 million.

Expenditure Also Increased

Total government expenditure rose 4.4% to €8.14 billion from €7.8 billion a year earlier, an increase of €343.1 million, according to the Statistical Service of Cyprus (Cystat).

Intermediate consumption increased 11.7% to €873.3 million, while compensation of employees, including imputed social contributions and civil servants’ pensions, rose 3.3% to €2.31 billion. Social benefits increased 5.2% to €3.36 billion, interest payments rose 5.6% to €298.8 million, and current transfers increased 9.1% to €549.4 million.

Capital expenditure, by contrast, fell 5.6% to €698.8 million. Gross capital formation increased 2.1% to €519.1 million, but other capital expenditure dropped 22.4% to €179.7 million, while subsidies declined 13.7% to €55.6 million.

Surplus Driven By Social Security Funds

Social Security Funds accounted for almost all of the overall surplus, recording a €775.1 million surplus compared with €712 million a year earlier.

Central government, meanwhile, posted a €5 million deficit, reversing a €39.7 million surplus in the first seven months of 2025. Local government remained marginally positive, but its surplus narrowed to €0.5 million from €7.9 million.

Advanced AI could materially change the speed, scale and economics of cyber risk, potentially undermining confidence across financial markets, particularly because of the concentration of critical third-party service providers, Bailey wrote.

Many jurisdictions also lack protocols for managing the development, release and deployment of advanced frontier AI models, he added. That could increase risks not only for financial markets but for the broader economy.

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Cybersecurity Is The First Fault Line

The warning comes amid growing concern about the security implications of advanced AI. Recent testing incidents involving models from Anthropic and OpenAI have highlighted how safeguards can be breached, raising concerns that increasingly capable systems could outpace existing controls.

For banks, asset managers and critical technology providers, the risks include vulnerabilities in shared infrastructure and technology dependencies. Bailey said firms will need stronger vulnerability management, faster incident response and more resilient recovery capabilities, while preparing for severe scenarios involving simultaneous disruptions across multiple institutions.

Broader Market Fragilities Are Building

AI is not the only concern raised in Bailey’s letter. He also flagged vulnerabilities in sovereign debt markets, increasing leverage among equity investors and stretched asset valuations, particularly in AI-related investments.

Those risks could reinforce one another if a market already priced at elevated levels were hit by an unexpected shock. Rapidly evolving technology and limited governance could add another layer of uncertainty to an already interconnected financial system.

Policy Challenge Extends Beyond Innovation

The debate is increasingly shifting from encouraging AI innovation to ensuring that financial institutions can absorb the operational, cybersecurity and market risks associated with frontier models.

That issue will be discussed as the U.S. hosts the G20 summit in North Carolina this week, bringing together finance ministers, central bankers and other senior officials to address the global economic outlook and emerging risks to financial stability.

For policymakers and financial institutions, Bailey’s warning points to a potential source of systemic risk beyond traditional credit and interest-rate shocks: the interaction between advanced AI, cyber threats and highly interconnected financial infrastructure.

Denmark recorded 7,098 arrivals in June, down from 9,058 a year earlier. Danish visitors stayed longer, averaging eight days versus seven, and spent €746.45 per person, up from €718.95 in June 2025. Daily expenditure, however, declined to €93.31 from €102.71.

The Netherlands also recorded fewer arrivals, falling to 3,997 from 6,273, while average stays shortened to 7.4 days from eight. Spending per visitor dropped to €867.21 from €993.70, and daily expenditure declined to €117.19 from €124.21.

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Sweden Bucks The Trend

Sweden stood out among the European markets, with arrivals increasing to 26,884 from 23,750. Average stays also rose to 7.8 days from 7.3, while spending per visitor increased to €861.16 from €788.14 and daily expenditure climbed to €110.41 from €107.96.

Long-Haul Markets Show High Value, Limited Volume

Norway recorded 9,239 arrivals, down from 10,148, but remained one of Cyprus’ highest-spending visitor markets. Tourists from Norway stayed an average of 7.7 days and spent €1,103.25 per person, or €143.28 per day, although Cystat did not consider comparable June 2025 expenditure figures sufficiently reliable.

The United States recorded 7,178 arrivals, slightly below 7,310 a year earlier. American visitors stayed an average of 13.3 days and spent €826.91 per person, or €62.17 per day, while comparable June 2025 expenditure data was also classified as having low reliability.

Italy And Greece See Longer Stays And Higher Spending

Italy saw arrivals fall to 4,178 from 6,332, but average stays increased to 6.2 days from 5.7. Spending rose to €612.30 per visitor, while daily expenditure reached €98.76.

Greece recorded 13,910 arrivals, down from 15,960, but visitors stayed significantly longer, averaging 8.1 days compared with 5.8 days in June 2025. Spending per visitor increased to €620.68 from €398.38, while daily expenditure rose to €76.63 from €68.69.

Data Reliability Limits Some Comparisons

Cystat flagged June 2026 data for Belgium and Switzerland as having low reliability, limiting direct year-over-year comparisons. Lebanon’s stay and expenditure figures were also classified as low reliability, while comparable data for Finland was considered insufficiently reliable.

What The Data Suggest For Cyprus Tourism

June figures point to a mixed tourism picture, with arrivals declining across several key European markets while spending increased in selected segments. Sweden, Greece and Italy recorded stronger spending, while Norway remained a high-value market despite lower visitor numbers.

For Cyprus, the data show that longer stays and higher per-visitor spending can partly offset weaker arrivals. Those gains, however, have not fully reversed the broader weakness recorded during the first half of the year.

The transaction was signed on May 8, 2025, notified to the Commission for the Protection of Competition on June 20, approved unanimously on July 17 and completed on Sept. 1, 2025.

The Stores And Assets Transferred

The acquisition covered ERA Mall of Cyprus in Nicosia, ERA Apollon in Limassol, ERA Korivos in Paphos and ERA Zenon in Larnaca. Gencom did not acquire the properties, but took over the leases, store furniture, infrastructure, equipment, trademarks and website domain names.

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ULS Unique Loyalty Services Ltd., which operates the UNIQUE rewards program in Cyprus, was also included in the deal. All department-store employees transferred to the buyer, while Gencom assumed about €4.5 million in outstanding obligations related to spring and summer 2025 supplier orders.

Stock remaining at completion was excluded from the €1 consideration and made available to Gencom on consignment. Ermes also agreed to provide essential support services to the buyer for a fee through the end of 2025.

Why The Price Was Symbolic

A nominal price reflected the financial condition of the department-store business and the commitments Gencom accepted. Ermes said the stores recorded operating losses of €1.3 million in 2024 and would have required substantial investment in renovations, IT systems and working capital.

For Ermes, the disposal removed future obligations linked to the loss-making unit and allowed management to focus on its remaining activities. Its board considered the transaction and pricing fair and reasonable, although no external advisers or independent valuation experts were appointed.

An accounting gain of about €1 million was expected, mainly from reversing a lease-related provision under IFRS 16. That gain represented the release of future lease obligations rather than cash proceeds from the buyer.

Who Is Gencom?

Gencom was established in Cyprus as a special-purpose vehicle for the transaction and had no prior business activity. Greek company Geniki Emporiki Ilektronikou Emporiou SA, or GEIL, controls the vehicle and operates in fashion, footwear, beauty products and online retail under the Politikos name.

Before the acquisition, GEIL already sold clothing and footwear online in Cyprus but had no physical department-store network. ERA, meanwhile, operated stores in four cities but had no meaningful e-commerce operation, allowing the transaction to combine the two businesses’ physical and digital capabilities.

What The Regulator Found

The Commission for the Protection of Competition reviewed the deal in Cyprus’ retail markets for fashion and beauty products. Its €825.096 million estimate represented the size of Cyprus’ clothing market in 2023, rather than the acquisition price.

ERA’s estimated share of the clothing market was between 0% and 5%, while the buyer’s online presence was also estimated at between 0% and 5%. The commission noted that the market estimate appeared not to include all footwear, watches and jewelry sales.

Any increase in combined market share would be negligible, the regulator concluded, describing Cyprus’ retail sector as fragmented and competitive, with low entry barriers and numerous domestic and international alternatives.

No horizontal overlap was identified in beauty products, and no vertical or closely related commercial relationship was found between the businesses. Based on those findings, the commission concluded that the transaction created no affected market and posed no risk of significantly restricting competition.

The commission unanimously decided not to oppose the acquisition and declared it compatible with competition in Cyprus.

What Comes Next

Post-completion performance data for the four ERA stores are not included in the Gazette decision. For Ermes, the sale marks an exit from a loss-making business, while Gencom is seeking to combine ERA’s physical retail network with an existing digital platform in Cyprus.

The platform provides ready-made and customized reports, interactive dashboards and visual presentations that track monthly state budget execution by ministry, government department, and revenue and expenditure category. It gives users a clearer view of how public funds are allocated and spent throughout the year.

Users can also access state budget data dating back to 2021, allowing them to compare budgeted and actual figures, analyze variances and identify changes in spending and revenue over time. Data can be filtered by year, month, public body, and spending or revenue category, giving users more flexibility to examine specific areas of the budget.

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A Push For Broader Public Understanding

According to Antoniades, the objective is not only to improve access to fiscal information but also to make budget data easier to understand for a wider audience.

“The tool is addressed to the entire society and is not limited to specialists or professionals in the field,” he said.

UBS highlighted Eurobank and Alpha Bank in a report shared by Greek business outlet Newmoney, as investors increasingly focus on the lenders’ regional footprints, including Cyprus. Greek banks remain among the clearest beneficiaries of the country’s economic recovery, while more disciplined capital deployment could create further value for shareholders.

Despite recovering from lows during the Middle East crisis, Greek banks continue to trade at a discount to European peers. UBS sees potential for a rerating as lenders combine selective acquisitions with higher shareholder distributions.

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Strong Fundamentals Support The Outlook

UBS expects performing corporate lending to grow about 8% annually between 2025 and 2028, while net interest margins are believed to have reached their low point. Improving net interest income and fee income should support earnings, while non-performing exposures and the cost of risk have fallen more than expected.

Greece is also expected to sustain GDP growth of roughly 2% annually, supported by investment backed by the EU’s Recovery and Resilience Facility. The country has received around €25 billion of the €36 billion available, while UBS forecasts a primary surplus of up to 3.5% of GDP in 2025 and public debt falling to 138% of GDP in 2026 and 133% in 2027.

Eurobank And Alpha Bank Stand Out In Cyprus

Eurobank drew particular attention following its acquisition of Hellenic Bank in 2025, which expanded its presence in Cyprus. UBS sees further growth potential across south-eastern Europe and considers the Hellenic Bank and Eurolife acquisitions positive for profitability and return on tangible equity.

Eurobank received a buy rating and a €5.10 price target, implying 11.7% upside. Alpha Bank also received a buy recommendation, with a €4.90 target implying 8.7% upside, supported by improving profitability, value-enhancing acquisitions and its share buyback program.

Piraeus And National Bank Offer Further Upside

Piraeus Bank was UBS’s top pick, with a buy rating and a €12 price target implying 18.8% upside. The bank cited long-term growth prospects, improving return on tangible equity and the expected acquisition of National Insurance, which would expand its financial services and bancassurance platform.

National Bank of Greece received a buy recommendation and an €18.70 target, implying 12.7% upside. UBS cited its profitability, capital position and credit quality, while its agreement with Allianz could provide further support to earnings and return on tangible equity.

Capital Discipline To Shape The Next Phase

UBS expects stronger lending, fee income, lower credit risks and continued economic growth to support Greek banks. However, the report argues that capital allocation will increasingly determine performance as lenders move beyond balance-sheet expansion.

For Eurobank and Alpha Bank, regional expansion, acquisitions, improving profitability and shareholder returns are expected to drive the next phase, while UBS sees further upside across the sector as lending and capital distributions strengthen.

The European Banking Authority has opened a consultation on new rules that could affect how Europe’s largest investment firms are supervised, particularly those with more than €30 billion in assets that may be required to move into the banking regulatory framework.

Clarifying The €30 Billion Threshold

Three draft regulatory technical standards cover how investment firms should calculate total assets, report those figures to supervisors and qualify for an exemption from the requirement to obtain a banking license.

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The proposals follow amendments to the Capital Requirements Directive in 2024 and aim to make the framework more proportionate while maintaining a focus on risk. Under the directive, firms that exceed €30 billion in assets are generally required to obtain authorization as credit institutions rather than remain solely under the Markets in Financial Instruments Directive.

That distinction can affect capital planning, governance, reporting requirements and business strategy.

New Rules On Asset Calculation And Waivers

Revised rules would clarify which entities and assets must be included when determining whether a firm has crossed the threshold, according to the EBA. Separate provisions would allow certain firms to continue operating under their existing investment-firm authorization instead of becoming credit institutions.

National regulators would assess whether a waiver is appropriate based on factors set out in the proposed framework. Firms granted an exemption would retain their existing regulatory status while remaining subject to supervision.

Balancing Flexibility And Financial Stability

A more proportionate approach should still account for the risks associated with larger investment firms, the EBA said. Regulators will need to balance flexibility for firms with consistent criteria for identifying businesses whose size and activities could have wider implications for financial stability.

For firms approaching the €30 billion threshold, the rules could determine both how their assets are measured and which regulatory regime applies.

Consultation Deadlines

Stakeholders can submit comments until Nov. 25, 2026. A virtual public hearing is scheduled for Sept. 30 at 10 am Central European Summer Time, with registration required by Sept. 25 at 4 pm CEST.

Comments can be submitted through the EBA’s consultation page using its online submission facility. Responses will be published after the consultation closes unless respondents explicitly request that their submissions remain unpublished.

EU industrial production returned to growth in 2025, ending two consecutive years of decline, according to new Eurostat data. The value of sold manufactured goods rose 2.9% in inflation-adjusted terms, marking the first annual increase since 2022 after contractions of 1.5% in 2023 and 1.9% in 2024.

Industrial Recovery Regains Momentum

In nominal terms, the value of EU sold production increased from €5.87 trillion in 2024 to €6.09 trillion in 2025. Eurostat measures the value of manufactured goods sold by industry, using constant prices with 2021 as the base year to distinguish changes in production from the effects of inflation.

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The figures point to a return to expansion after two difficult years, although the recovery varied significantly across manufacturing industries.

Food And Machinery Lead The Upswing

Among the five largest manufacturing activity groups, food products recorded the strongest annual increase, with sold production rising 3.8% in constant-price terms from 2024. Food output was also 11.2% higher than in 2015.

Machinery and equipment followed with a 3.3% increase, while motor vehicles, trailers and semi-trailers rose 0.6%. Chemicals and chemical products declined 1.4%, as did fabricated metal products excluding machinery and equipment.

Cyprus Posts Strong Manufacturing Growth

Cyprus also recorded solid industrial growth in 2025. Data from the Statistical Service of Cyprus, or Cystat, show manufacturing production increased 4.4% in the first 11 months of the year from the same period in 2024, while overall industrial production rose 3.6%.

Manufacturing remained the main driver of that increase, with output up 4.6% in December alone. Several segments recorded strong gains, including other non-metallic mineral products, up 10.9%; wood and cork products, up 9.1%; basic metals and fabricated metal products, up 8%; and furniture and related manufacturing, up 7.2%.

Other sectors contracted during the year. Production of paper and paper products and printing fell 9.5%, while textiles, wearing apparel and leather products declined 3.8%. Electricity supply also fell 2%.

Cyprus Outpaces The Broader EU Recovery

Cyprus outperformed the EU’s broader industrial recovery in 2025, although its manufacturing base differs significantly from those of the bloc’s larger industrial economies. The performance also came amid broader economic growth, with tourism, construction, trade and manufacturing all recording gains during the year.

The Eurostat data indicate that European manufacturing regained momentum after two years of contraction, while Cyprus saw industrial activity become a more significant contributor to its wider economic growth.

Smartphone shipments across the Middle East, excluding Turkey, fell 19% year over year to 10.6 million units in the second quarter of 2026, according to Omdia, as higher prices, supply constraints and geopolitical uncertainty weighed on demand. Weaker consumer confidence also prompted retailers to take a more cautious approach to inventory, making the decline the steepest since the fourth quarter of 2025.

Lower-End Demand Weakens First

Manufacturers continued passing higher component costs on to consumers while focusing on mid-range and premium devices, where margins are stronger. Shipments of smartphones priced below $200 fell 42% year over year, with Iraq reporting a 36% decline as markets reliant on low-cost devices came under greater pressure.

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Mid-Range Becomes Strategic Battleground

The mid-range segment has become a key competitive category as manufacturers retain features such as memory, storage, cameras, battery capacity and artificial intelligence capabilities while managing higher costs. Shipments of devices priced above $300 rose 16% year over year, while smartphones with 256GB of storage accounted for 55% of all shipments.

Premium Demand Proves Resilient

Shipments of smartphones priced above $800 reached 1.9 million units, the highest second-quarter total on record for the segment in the Middle East. Apple was the primary driver of that growth, while the United Arab Emirates and Qatar recorded stronger demand for premium devices.

In the UAE, a mature retail network and installment financing helped limit the market decline to 7%, while Qatar posted 2% growth, supported by stable economic conditions and continued demand for premium smartphones.

Average Selling Prices Rise

The shift toward higher-priced devices pushed the region’s average selling price up 25% year over year to $448, the highest second-quarter figure on record. Manish Pravinkumar, principal analyst at Omdia, said the market reflects “a convergence of necessity and strategy” as vendors seek to protect competitiveness and brand positioning while accepting some volume loss.

“Prioritising profitability and revenue over volume has become critical in an increasingly challenging operating environment, even at the expense of short-term results,” Pravinkumar said, adding that the reset reflects lessons from earlier cost cycles when aggressive discounting weakened profitability.

Vendor Performance Reflects Different Strategies

Samsung remained the region’s leading vendor with a 39% market share despite a 7% decline in shipments, balancing its volume-focused Galaxy A series with Galaxy S26 models aimed at protecting margins. HONOR, the second-largest vendor, grew 2%, while TRANSSION and Xiaomi, ranked third and fourth, respectively, saw shipments fall 40% and 50% as rising prices weakened entry-level affordability.

Apple grew 1% from the second quarter of 2025, supported by steady premium demand, its ecosystem and continued consumer financing.