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Cyprus Economy Faces Pressure From Geopolitical Risk, Inflation And Energy Costs

by THEFUTURE.TEAM

August 3, 2026

Businesses In Trade, Tourism And Real Estate Face The Greatest Risks

Businesses in trade, tourism and real estate, together with lower-income households, remain the most exposed parts of the Cypriot economy as geopolitical tensions, inflationary pressures and elevated energy prices continue to weigh on the outlook.

In its latest Financial Stability Report, the Central Bank of Cyprus said stronger corporate and household balance sheets and continued lending growth have improved resilience, but companies in these sectors remain particularly vulnerable to weaker external demand, higher energy costs and any further escalation of tensions in the Middle East.

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Lending Continues To Grow

Businesses in the most exposed sectors continue to carry relatively high debt levels and limited cash reserves, making them more sensitive to economic shocks. By contrast, firms in information and communication, professional and technical services, as well as transportation and storage, appear better positioned thanks to lower leverage and stronger liquidity.

Financing conditions remained supportive throughout 2025, with new business lending reaching a record €3 billion and household lending totaling €1.8 billion. Banks also maintained strict lending standards, helping contain the risk of new non-performing loans.

Lower-Income Households Remain More Vulnerable

A resilient labour market supported household incomes during 2025, but gains were uneven. Income rose by 3.9% for lower-income households, compared with 7.1% for higher-income groups, leaving more vulnerable families less able to absorb future shocks.

The central bank also warned that renewed inflation or higher borrowing costs would place additional pressure on heavily indebted households and those with limited savings.

Deposits Continue To Strengthen Resilience

Corporate deposits increased by 17.5% in 2025, the fastest annual growth since 2018, while household deposits rose by 6.2%, strengthening liquidity across the private sector.

Although the direct impact of U.S. trade policy on Cyprus is expected to remain limited, the report said indirect effects, including higher energy prices, supply-chain disruptions, weaker external demand and softer investor sentiment, could weigh on economic activity and financial stability.

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Bitcoin Surges 23% In A Week As Investor Optimism Returns

by News Editor

August 21, 2026

Bitcoin was on track for a weekly gain of around 23% on Friday as a series of positive macroeconomic and policy developments boosted investor sentiment.

The cryptocurrency was trading about 6% higher at roughly $77,000, up from around $62,800 at the start of the week. Crypto-related stocks also rallied, with Coinbase and Circle gaining more than 9%, while Strategy rose 7%.

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Macro Factors Fuel Rally

Bitcoin’s latest surge began Wednesday after Treasury yields fell sharply following a major intervention by the U.S. Treasury in the bond market. Lower yields eased pressure on risk assets and helped trigger a broader move into cryptocurrencies.

The rally was further amplified by a major short squeeze. Around $2.7 billion in crypto short positions were liquidated, according to CoinGlass.

Max Stuedlein, head of Partnerships at Sygnum APAC, said the move reflected an alignment of macroeconomic and policy catalysts, including the Treasury’s decision to increase buybacks of longer-dated government debt.

Clarity Act Boosts Sentiment

Investor confidence improved further on Thursday as the White House and crypto industry leaders made a final push to advance the Clarity Act in the coming weeks.

The legislation is widely viewed as a potential catalyst for the crypto market, although its chances of passing remain relatively limited.

Despite the rally, bitcoin remains well below its 2026 high of $94,820 reached in January and its all-time high of $126,198, set last October.

Analysts See More Volatility Ahead

Lucy Gazmararian, founder and managing partner at Token Bay Capital, said the crypto market may be approaching the end of its bear cycle.

She expects bitcoin could experience one more decline of around 20% before the market turns, pointing to historical cycles and the recent liquidation of heavily leveraged short positions.

Gazmararian also described bitcoin as a long-term hedge against monetary debasement, while warning that its short-term price remains highly volatile and driven by market cycles.