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Cyprus Economy Under Steady Fiscal Discipline: Growth, Revenue Surpluses, and Future Challenges

by THEFUTURE.TEAM

November 12, 2025

The Cyprus economy continues to operate under a regime of steady fiscal discipline, according to Michalis Persianis, President of the Fiscal Council of Cyprus. In his 2024 Activity Report, published on the Council’s website, Persianis outlines a robust macroeconomic environment characterized by stable growth and resolute measures to maintain fiscal health.

Strong Macroeconomic Fundamentals and Revenue Expansion

Persianis emphasizes that key macroeconomic and fiscal indicators remain strong, with the economy growing at an approximate rate of 3% supported by a diversified base of activities. Concurrently, the public debt trajectory is on a downward path, with clear policies aimed at reducing it to below 60% of GDP by 2025.

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In addition to these measures, state revenues are rising at a pace that exceeds expectations, outstripping growth and inflation rates. Employment levels remain robust while the unemployment rate has been tightly contained, suggesting that any further decline in unemployment might signal potential imbalances in the labor market.

Resilient Consumption and Zero Inflation

Despite the strong growth phase, the inflation rate remains at a stable zero, even as consumption—albeit experiencing mild deceleration—continues to serve as a cornerstone for sustained economic progress. This balance underscores Cyprus’s ability to drive growth while managing inflationary pressures.

Risks of Complacency in Favorable Times

While the current economic outlook appears positive, Persianis warns that such prosperity could foster a false sense of security. He cautions, “These are the easy times, which also make them the most dangerous,” highlighting the essential role of the Fiscal Council in safeguarding the long-term fiscal stability of the nation.

Looking ahead, he anticipates that external geopolitical developments, an increase in global debt, and rapid technological changes will impose additional challenges during the 2027–2028 period.

Preparing for Future Challenges With Structural Reforms

Persianis identifies two primary priorities for Cyprus. First, preserving fiscal leeway is essential to allow for decisive action when circumstances demand it. Second, the country must prepare for emerging risks such as climate change, natural disasters, rising electricity demand, and significant infrastructure challenges.

In particular, he notes an urgent need to upgrade infrastructure in the water, energy, and public transportation sectors—areas that are approaching critical levels of strain and necessitate substantial investment.

International Recognition And The Role Of The Fiscal Council

The Activity Report also highlights ongoing enhancements in the Council’s analytical capabilities, including investments in quantitative models and external evaluations. Notably, the Council is set to host the 2026 Thematic Conference of the European Network of Independent Fiscal Institutes (EUNIFI) at a time when Cyprus will preside over the European Commission.

In conclusion, Persianis views the current favorable economic conditions as a unique opportunity to implement reforms that will fortify public finances and shield the nation from future risks. His analysis serves as both a celebration of current achievements and a cautionary call for sustained vigilance and structural advancement in fiscal policymaking.

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Nearly 80% Of Cyprus’ Foreign Investment Came From Outside EU In 2025

by THEFUTURE.TEAM

November 11, 2026

Cyprus had the highest share of foreign direct investment (FDI) originating outside the European Union among 14 EU member states reporting data for 2025. According to Eurostat, non-EU economies accounted for 79.4% of the island’s inward FDI, highlighting its distinct position among the reporting countries.

The figures contrast with most other EU economies, where investment from within the bloc remains the main source of foreign capital.

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Cyprus Leads In Non-EU Investment Share

Eurostat measures inward FDI positions by the ultimate investing economy, identifying the economy where the investment ultimately originates rather than only the country through which it is channelled. This distinction is important when investments involve subsidiaries or intermediary holding companies.

In nine of the 14 reporting countries, most foreign investment came from within the EU. The Czech Republic recorded the highest intra-EU share, at 75.1%, followed by Romania at 73.3% and Estonia at 64.8%.

Cyprus was among five countries where non-EU economies accounted for more than half of inward FDI. Spain, Sweden, Greece and Denmark also recorded shares above 50%, ranging from 51% to 55.1%.

US Is The Largest Source Of FDI Across Reporting Countries

Across the 14 countries collectively, the United States was the largest ultimate source of foreign direct investment, accounting for 15.4% of the total.

Germany ranked second at 11.5%, followed by France at 9.4%, the United Kingdom at 9.3% and Switzerland at 5.8%.

These figures reflect the combined investment positions of the reporting countries and do not identify Cyprus’s leading individual investment sources. However, the country-level data underline the island’s strong reliance on capital originating outside the European Union.