The House Price Index for the second quarter of 2024 amounts to 112.86 units, according to CySTAT’s preliminary estimate. increasing by 2.5% compared to the Index of the corresponding quarter of 2023.

Compared to the first quarter of 2024, the HPI increased by 1.2%.

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The House Price Index (HPI) is a quarterly index which measures the change in the average prices of residential housing units. It captures all types of residential properties, both new and existing. The land component of the residential property is included.

Cyprus is set to deliver a fiscal surplus of €1.13 billion in 2025, equivalent to 3.3% of GDP, according to the state budget presented to the House of Representatives.

The budget outlines an overall increase in revenues of 6.2% in 2025, with a slight 1.2% reduction in expenditures compared to 2024.

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Total state expenditure for 2025 is projected at €12.93 billion, encompassing debt repayments, interest, and investments. The breakdown includes €3.53 billion for the Fixed Fund, €7.85 billion in regular expenditures, and €1.55 billion for development expenses. This represents a slight decrease from the €13.1 billion allocated in 2024.

In terms of revenues (excluding financial flows), the government forecasts a 6.2% increase, bringing the total to €10.31 billion in 2025, compared to €9.71 billion in 2024. The main sources of revenue will come from direct and indirect taxation, estimated at €8.48 billion—or 82% of total revenues. The remaining 18% will be generated from non-tax income, including the sale of goods and services, rental income, and transfers.

Direct tax revenues are projected to rise by 4.9% to €3.92 billion, while indirect taxes are expected to increase by 5.6%, totalling €4.56 billion. Non-tax revenues are forecast to see a significant 10.3% increase, reaching €1.83 billion.

While there is a slight 1% decrease in personnel-related expenditures, totalling €3.62 billion in 2025, operational expenditures are expected to surge by 21.4%, reaching €1.42 billion. This is attributed to increases in reserve funds, defence, policing, and consulting services.

Transfer payments—including social benefits, grants to public and private organizations, and contributions to the EU budget—are expected to grow by 5.3%, reaching €3.99 billion. The largest increases in 2025 will be in contributions to the General Healthcare System (GeSY) and social security funds.

Capital expenditures, which cover co-financed projects, land and equipment purchases, and building renovations, are projected to rise by 4% in 2025 to €1.14 billion. Meanwhile, debt service expenditures are expected to fall by 18.6%, dropping to €2.75 billion in 2025 from €3.38 billion in 2024.

Steady growth until 2027

Looking at key economic indicators, the Cypriot economy is expected to grow steadily through 2027. GDP for 2025 is projected at €33.86 billion, with an annual growth rate of 3.1%. By 2027, GDP is forecast to reach €37.54 billion, with growth rates of 3.2% and 3.3% in 2026 and 2027, respectively.

Unemployment is set to decline from 5.0% in 2024 to 4.5% by 2027, while inflation is expected to remain stable at 2.0% annually from 2025 to 2027. The fiscal surplus is forecast to remain strong, at 3.3% of GDP in 2025, declining slightly to 3.1% by 2027.

The primary surplus is expected to reach 4.8% of GDP in 2025 and stabilize at 4.4% by 2027. Meanwhile, public debt as a percentage of GDP is projected to decline from 69.3% in 2024 to 64.2% in 2025 and 53.5% by 2027.

Capital expenditures are expected to peak at €1.39 billion (or 4.1% of GDP) in 2025, before dropping to 3.1% of GDP by 2027.

The economic situation and rising prices and cost of living were the main topics that motivated Cypriots to vote in the last European elections in June this year, according to a post-electoral survey published by the European Parliament.

These were also the two main reasons for voting on the EU level (42% for cost of living and 41% for the economic situation), but the shares were much larger in Cyprus where the economic situation led with 56%, followed by rising prices and cost of life with 47%.

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The third most popular reason in Cyprus was migration and asylum (45%, compared to 38% and sixth place in the EU average), followed by education in fourth place (26%, compared to 13% in the EU) and democracy and rule of law in fifth place (24%, compared to 32% and fourth place in the EU).

The international situation was in sixth place for Cypriots tied with the defence and security of the EU (21%), while on average in the EU the global situation was picked in third place with 34% and defence and security in seventh place with 28%.

Those who did not vote in Cyprus said the cost of living (53%), migration and asylum (45%) and the economic situation (42%) could have motivated them to participate in the elections.

The European Parliament post-electoral survey across the EU was conducted between June 13th and July 8th 2024, with a total of 26,349 face-to-face interviews. In Cyprus, the survey was conducted from June 13th to July 5th, and a total of 506 face-to-face interviews.

Israel’s economy has suffered a significant setback as both Standard & Poor’s (S&P) and Moody’s, two of the world’s leading credit rating agencies, issued warnings that cast doubt on the country’s economic stability. The dual blow comes amidst rising concerns over Israel’s political landscape and its potential impact on the nation’s economic health.

S&P and Moody’s have each downgraded Israel’s outlook from stable to negative, pointing to increasing uncertainty driven by domestic political turbulence. These revisions could potentially raise the cost of borrowing for Israel, as investors factor in the increased risk associated with the country’s future economic prospects. Moody’s, in particular, highlighted the “political and social tensions” that could undermine economic reforms and long-term growth.

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The current political crisis, marked by widespread protests and deep divisions over judicial reforms, has sent shockwaves through both the Israeli public and international observers. The ongoing unrest has raised concerns that political instability could stymie Israel’s traditionally resilient economy, which has been a standout in the Middle East due to its strength in sectors such as technology, defence, and innovation.

One of the primary concerns raised by the credit rating agencies is the potential weakening of institutional checks and balances, particularly in relation to the government’s push to overhaul the judicial system. Such reforms have triggered fears that Israel’s reputation as a stable and transparent democracy could be at risk, with potential negative implications for foreign investment and economic growth.

Despite these setbacks, Israel’s economy remains robust, with strong fundamentals in key sectors. The country has long been a hub for innovation, particularly in the technology industry, which continues to attract international investors. However, the downgrades from S&P and Moody’s send a clear message that political turmoil could jeopardise these advantages.

For Prime Minister Benjamin Netanyahu’s government, these warnings represent a critical challenge. As the nation navigates this period of uncertainty, the administration will need to strike a delicate balance between political reforms and maintaining investor confidence. Failure to do so could result in further economic challenges, especially if international markets begin to question Israel’s long-term stability.

In the short term, the downgrades are a wake-up call for the Israeli government to reassess its political strategy and ensure that economic stability remains a priority. While Israel’s core industries continue to perform well, the political situation will need careful management to prevent long-term damage to the country’s economic reputation and global standing.

Cyprus continues to draw international attention for its hallmark product—halloumi—while simultaneously witnessing the rapid growth of its technology sector. As the island balances its traditional agricultural strengths with its ambition to become a regional tech hub, a growing number of businesses are targeting niche markets to drive economic growth and global competitiveness.

Halloumi, the iconic Cypriot cheese, remains a significant contributor to the country’s economy. Its Protected Designation of Origin (PDO) status, granted by the European Union, has provided a vital shield, securing its authenticity and safeguarding Cypriot producers from international competition. This distinction ensures that only cheese produced in Cyprus following traditional methods can be marketed under the “halloumi” name within the EU. Consequently, halloumi exports have surged, solidifying its role as a national asset.

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Yet, while agriculture remains an important economic pillar, Cyprus is diversifying rapidly into technology, driven by the digital transformation of global industries. The Cypriot tech sector has grown significantly in recent years, with local and international companies establishing themselves on the island. This growth is supported by favourable government policies, including tax incentives and investment in digital infrastructure, as well as the country’s strategic location at the crossroads of Europe, Africa, and the Middle East.

Tech companies in Cyprus are increasingly looking to niche markets to carve out competitive advantages. These markets—ranging from fintech to healthtech and cybersecurity—offer opportunities for specialised solutions, particularly in a world where digital services and innovation are at the forefront of global demand. By focusing on these targeted areas, Cypriot tech firms are aiming to provide unique value propositions, establishing themselves as leaders in their respective fields.

The marriage of tradition and innovation is a defining characteristic of Cyprus’ current economic trajectory. Halloumi serves as a reminder of the island’s rich cultural heritage, while the burgeoning tech industry illustrates its forward-looking ambitions. For businesses operating in Cyprus, this combination presents a unique opportunity to leverage the country’s growing reputation in both sectors.

In an increasingly competitive business environment, Eurofast, a regional business advisory organisation, continues to assert its presence by expanding its outsourcing centre in Banja Luka, Bosnia and Herzegovina. The company’s decision reflects its broader growth strategy, positioning it to tap into the rising demand for outsourcing services across the Balkans and the wider European region.

The expansion in Banja Luka is more than a routine operational shift—it signals a forward-thinking move by Eurofast to strengthen its foothold in a market that has been gaining traction for outsourcing. The region offers a cost-effective yet skilled labour force, a crucial factor for companies looking to optimise operational efficiency while maintaining high service standards. Eurofast’s ability to capitalise on these opportunities demonstrates its strategic agility and foresight in recognising the region’s potential.

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Banja Luka, the second-largest city in Bosnia and Herzegovina, is emerging as a hub for outsourcing, thanks to a combination of economic stability and a growing pool of talent. The city’s relatively low cost of living compared to Western European cities makes it an attractive location for companies seeking to balance cost control with access to a skilled workforce. Eurofast’s expansion is likely to enhance the local economy by creating job opportunities, particularly in finance, accounting, and administrative support services—sectors where outsourcing demand is strongest.

Eurofast’s CEO, Christodoulos Damianou, has been vocal about the company’s ambitious plans for the region. He highlights that the expansion is part of a long-term vision to serve international clients more effectively by providing bespoke solutions from a centralised, strategically located hub. This approach aligns with global outsourcing trends, where companies seek to consolidate services in fewer, high-performing centres rather than spreading operations across multiple locations.

The expansion also underscores Eurofast’s confidence in the region’s political and economic stability, which is critical for long-term investment. Bosnia and Herzegovina, while still navigating its post-conflict reconstruction, offers a stable business environment with favourable trade agreements with the European Union, which is a critical consideration for Eurofast’s clientele.

By reinforcing its operations in Banja Luka, Eurofast not only strengthens its position in the outsourcing market but also underscores its commitment to delivering cost-effective, high-quality services. As businesses increasingly look to outsourcing as a means of driving efficiency, Eurofast’s move is a timely and strategic investment in the future of both the company and the region.

There is very close coordination on the country’s energy planning to reduce the price of electricity as soon as possible, Government Spokesperson Konstantinos Letymbiotis has said.

He was speaking on 1 October, following the military parade for the Independence Day of the Republic of Cyprus in Nicosia.

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Asked about developments in the energy sector following the meetings of President Nikos Christodoulides in New York, Letymbiotis said that significant steps have been taken in the three main pillars of the Republic of Cyprus’ energy plans, namely the arrival of natural gas, the electricity interconnections and the acceleration of Renewable Energy Sources penetration.

He further explained that important meetings were held in New York with the Greek Prime Minister and the French President regarding the electrical interconnection project, as well as with the United Arab Emirates state-owned company TAQA, which has expressed interest in participating in the Great Sea Interconnector project, and with Chevron regarding the Aphrodite project.

“We are in very close coordination because we understand and appreciate the importance of energy planning for every Cypriot household and its implementation as soon as possible to reduce the price of electricity in our country,” Letymbiotis said.

He also indicated that the decisions taken in the previous period should be activated and implemented as soon as possible.

Cyprus is grappling with an unrelenting wave of inflation that continues to squeeze household budgets and challenge businesses. The latest data from the Cyprus Statistical Service reveals a 19.2% overall rise in prices, with food prices showing an even more alarming increase of 25.7%. This spike in food costs underscores the severity of the economic pressures impacting consumers and companies alike.

The root causes of this inflationary surge are multifaceted. Global factors, including the lingering effects of the pandemic, disruptions in supply chains, and the geopolitical crisis in Ukraine, have contributed significantly to the escalating prices. Energy costs, transportation challenges, and rising production expenses have compounded the situation, leaving Cypriot consumers facing the steepest increase in food prices seen in years.

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Inflation’s ripple effects are felt most acutely in essential commodities. Basic food items such as bread, dairy products, and vegetables have become notably more expensive, straining the budgets of lower- and middle-income households. Many families have resorted to adjusting their spending habits, cutting back on non-essentials, and seeking lower-priced alternatives in an effort to cope with the price hikes.

From a business perspective, rising costs have created a challenging environment. Retailers and food producers are grappling with the delicate balance of managing increased overheads while trying to avoid passing too much of the burden onto consumers. As prices surge, businesses are faced with a potential decline in consumer spending, leading to lower profit margins and a potential shift in the competitive landscape. For some companies, these conditions could prompt innovation, particularly in finding more efficient methods of production or sourcing materials, but the road ahead remains uncertain.

The Cypriot government has taken some measures to mitigate the impact, including fuel subsidies and tax relief efforts, but these have so far proven insufficient in stemming the tide of rising costs. Calls for more robust interventions, such as targeted subsidies for essential goods or a reduction in VAT rates on food items, have gained traction in public discourse. However, with inflation largely driven by external global forces, the government’s ability to control the situation remains limited.

As inflationary pressures persist, both businesses and consumers will need to navigate an evolving economic landscape. For Cyprus, addressing these challenges may involve a combination of government action, industry innovation, and a recalibration of consumer behaviour. Ultimately, the capacity of both businesses and households to adapt will be key to weathering this period of heightened economic uncertainty.

Foreign but also Cypriot investors have shown interest in the port of Larnaca, Minister of Transport, Communications and Works Alexis Vafeadis said on Friday, urging Cypriots to enter the bidding process for the port.

In statements after a meeting he held with the Mayor of Larnaca and the Ad Hoc Committee, the Minister referred to the development of the port and marina of Larnaca, saying that the project must take such a form that it will serve the next generations.

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The Minister was asked whether, given the situation in the Middle East, it is easy to find an investor for the port. 

He replied that in the last three months, the phone calls he has received and the reports from many people in the private sector,  “encourage us that we will find an investor”.

He added that Qatar is just one investor that has expressed interest.

There are, he continued, others who have expressed interest.

The Minister noted that there are also Cypriots who are interested adding that “we want, if they can enter the bidding process, that Cypriots take it”.

The tourist sector’s positive performance in the last two years is not a reason for complacency, Kostas Koumis Deputy Minister for Tourism said, addressing an event hosted by the Deputy Ministry to mark the World Tourist Day, that was held in Eleftheria Square, Nicosia, on Friday.

“We need to redefine the role of tourism for the economy, entrepreneurship, the environment and the society,” he said.

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According to Koumis, the most significant challenge which acts as an existing threat to society as a whole, the economy and tourism is climate change.

“And for this reason, the Deputy Ministry has incorporated a special chapter on green transition in the updated National Strategy for Tourism,” he added.

Referring to the performance of the sector this year, Koumis said that data show that in the period from January to August, arrivals increased by 4.1%, compared to the respective period last year, while they marginally increased compared with the same period of 2019, which was Cyprus’ historic record year in terms of tourist arrivals. Furthermore, he added that revenue from tourism in the first six months of the year were up by 4.2% year on year, despite the fact that 2024 is marked by many adversities.

However, Koumis pointed out that the course of tourism is not secure, as a series of challenges, with the greatest stemming from climate change, call for the need to take immediate measures.

“Each destination’s competitiveness is directly attached to the implementation of sustained and environmentally responsible policies, and this is a one-way street if we want our country’s tourist sector to be competitive,” the Deputy Ministry said.