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Cyprus Economy: Strong Growth Ahead Despite Structural Challenges

by THEFUTURE.TEAM

January 17, 2025

Cyprus is poised to sustain strong economic growth in the coming years, according to a recent report from the Canadian rating agency Morningstar DBRS. The agency also predicts a steady decline in unemployment, which is expected to bolster the nation’s fiscal performance.

Despite these positive projections, the report highlights persistent hurdles facing the Cypriot economy. As a small, service-driven market, Cyprus remains highly susceptible to external shocks. Additionally, while strides have been made to reduce non-performing loans (NPLs), their levels still exceed the Eurozone average. Challenges in labour market productivity further restrict the nation’s economic potential.

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On a brighter note, progress in addressing NPLs has been significant. Data from the Central Bank of Cyprus show that NPL ratios in approved credit institutions dropped to 6.8% in August 2024, a dramatic reduction from 43.7% at the end of 2017. This improvement represents an €18.9 billion decrease in absolute terms.

Morningstar DBRS anticipates this downward trajectory to persist but acknowledges that eliminating the remaining NPLs will require time. By mid-2024, credit acquisition companies managed exposures of approximately €21 billion, with 94% classified as non-performing.

The report also notes delays faced by KEDIPES, the state-owned asset management company. Challenges such as foreclosure moratoriums, the COVID-19 pandemic, and geopolitical tensions have pushed the company’s operational deadline to 2030.

Housing prices, meanwhile, have shown sustained growth. As of Q2 2024, property prices in Cyprus rose by an annual rate of 8.0%, with house prices increasing by 6.2% and apartment prices surging by 12.0%. Most of the real estate collateral tied to NPLs consists of residential properties, with Nicosia and Limassol identified as the most stable markets on the island.

While structural vulnerabilities persist, Morningstar DBRS’s analysis underscores Cyprus’ resilience and ability to adapt. Continued efforts to address NPLs, coupled with a robust housing market and improved employment metrics, suggest the nation is on a steady path toward economic stability and growth.

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EU Services Production Grows As Information And Communication Lead

by THEFUTURE.TEAM

November 10, 2026

Services production continued to expand across the European Union in August 2026, with information and communication recording the strongest annual growth. However, performance varied significantly between industries and member states, while Cyprus reported a mixed picture, with business services expanding and hospitality-related activities declining.

Information And Communication Leads Sector Growth

Compared with August 2025, services production increased by 5.9% in the euro area and 5.8% across the EU in information and communication. Transportation and storage also recorded growth, rising by 2.1% and 1.9%, respectively.

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Real estate activities increased by 1.6% in the euro area and 1.1% in the EU. Professional, scientific and technical activities grew by 1% in both areas, while administrative and support services advanced by 1.1% and 1.3%.

Accommodation and food services was the only major sector to record an annual decline, falling by 0.1% in both the euro area and the EU.

The monthly figures were more mixed. Information and communication remained the strongest performer, increasing by 1.2% in the euro area and 1% across the EU. Real estate activities rose by 0.4% and 0.9%, respectively, while transportation and storage edged up 0.1% in the euro area but declined by 0.2% in the EU.

Administrative and support services recorded modest gains of 0.2% in the euro area and 0.1% in the EU. Accommodation and food services fell by 0.3% and 0.4%, while professional, scientific and technical activities declined by 0.8% and 0.9%, respectively.

Slovakia And Greece Record Strongest Annual Growth

Romania recorded the largest monthly increase in services production, at 5.2%, followed by Malta at 1.8% and Portugal at 1.7%. Luxembourg experienced the steepest decline, with output falling by 5.1%, followed by Bulgaria at 2.3% and Denmark at 1.9%.

On an annual basis, Slovakia led with growth of 10%, followed by Greece at 9.3% and Malta at 7.5%. Hungary recorded the weakest performance, with services production declining by 5.6%. Denmark fell by 5.3%, while Italy recorded a smaller decrease of 0.3%.

Cyprus Sees Growth In Business Services But Weakness In Hospitality

Cyprus’ latest figures show a similar divide between expanding business services and weaker hospitality-related activities. According to the Statistical Service of Cyprus (Cystat), professional, scientific and technical activities recorded the strongest annual growth among the covered sectors in the second quarter of 2026, increasing by 3.4%.

Transportation and storage and information and communication both grew by 2.1%, while real estate activities rose by 1.6%. In contrast, accommodation and food services declined by 3.1% year on year, and administrative and support services fell by 2.2%.

First-half results were more favourable for several sectors. Between January and June, professional, scientific and technical activities grew by 3.5%, transportation and storage by 2.8%, real estate by 2.1% and information and communication by 1.3%.

Nevertheless, administrative and support services contracted by 1% over the six-month period, while accommodation and food services declined by 0.7%.

How Cyprus’ Figures Differ From Eurostat’s Data

The Eurostat and Cystat figures measure different aspects of economic activity and are not directly comparable. Eurostat’s services production index tracks changes in the volume of output, whereas Cystat’s Turnover Value Index for Services and Transport measures the value of sales at current prices.

The reporting periods also differ: Eurostat’s figures cover August, while the cited Cypriot data relate to the second quarter and first half of 2026.

Cystat transmits services production data to Eurostat but does not yet publish a separate national production index. Turnover figures therefore remain the main publicly available national indicator for the sector.

Taken together, the data point to continued growth in several of Cyprus’ business-oriented services, alongside persistent pressure on accommodation, food and administrative support activities.