Cyprus Extends Measures To Mitigate Rising Living Costs

The Cypriot government has approved an extension of financial measures aimed at alleviating the high living costs faced by households and businesses. This decision, spearheaded by Finance Minister Makis Keravnos, underscores the government’s commitment to addressing economic challenges exacerbated by the summer climate.

Key Measures and Financial Implications

The primary measure is the continuation of a staggered subsidy on electricity consumption from July to October 2024. This subsidy, targeting domestic, commercial, and industrial consumers, fully covers the increase in electricity prices for vulnerable groups. The cost of this extension is estimated at €12 million, benefitting 400,000 households and 100,000 businesses.

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Additionally, the government has prolonged the application of a zero VAT rate on essential items until the end of September, costing approximately €11 million. These measures are part of a broader strategy to support citizens amidst escalating costs.

Government’s Fiscal Prudence

Government Spokesperson Konstantinos Letymbiotis highlighted the administration’s responsible fiscal policies, which have positioned Cyprus as an attractive investment destination. The prudent management of finances has enabled the implementation of targeted measures to significantly enhance the quality of life for its citizens.

Future Directions

Looking ahead, the government aims to address long-term energy challenges, focusing on sustainable solutions like the green transition. This forward-looking approach not only aims to stabilise current economic conditions but also to ensure a resilient and sustainable future.

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Cyprus Hits Historic Tourism Peak As Overtourism Risks Mount

by THEFUTURE.TEAM

February 13, 2026

Record-Breaking Performance In Tourism

Cyprus’ tourism sector achieved unprecedented success in 2025 with record-breaking arrivals and revenues. According to Eurobank analyst Konstantinos Vrachimis, the island’s performance was underpinned by solid real income growth and enhanced market diversification.

Robust Growth In Arrivals And Revenues

Total tourist arrivals reached 4.5 million in 2025, rising 12.2% from 4 million in 2024, with momentum sustained through the final quarter. Tourism receipts for the January–November period climbed to €3.6 billion, marking a 15.3% year-on-year increase that exceeded inflation. The improvement was not driven by volume alone. Average expenditure per visitor increased by 4.6%, while daily spending rose by 9.2%, indicating stronger purchasing power and higher-value tourism activity.

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Economic Impact And Diversification Of Source Markets

The stronger performance translated into tangible gains for the broader services economy, lifting real tourism-related income and overall sector turnover. Demand patterns are also shifting. While the United Kingdom remains Cyprus’ largest source market, its relative share has moderated as arrivals from Israel, Germany, Italy, the Czech Republic, the Netherlands, Austria, and Poland have expanded. This gradual diversification reduces dependency on a single market and strengthens resilience against external shocks.

Enhanced Air Connectivity And Seasonal Dynamics

Air connectivity has improved markedly in 2025, with flight volumes expanding substantially compared to 2019. This expansion is driven by increased airline capacity, enhanced route coverage, and more frequent flights, supporting demand during shoulder seasons and reducing overreliance on peak-month flows. Seasonal patterns remain prominent, with arrivals building through the spring and peaking in summer, thereby bolstering employment, fiscal receipts, and corporate earnings across hospitality, transport, and retail sectors.

Structural Risks And Future Considerations

Despite strong headline figures, structural challenges remain. The European Commission’s EU Tourism Dashboard highlights tourism intensity, seasonality, and market concentration as key risk indicators. Cyprus records a high ratio of overnight stays relative to its resident population, signalling potential overtourism pressures. Continued reliance on a limited group of origin markets also exposes the sector to geopolitical uncertainty and sudden demand swings. Seasonal peaks place additional strain on infrastructure, housing availability, labour supply, and natural resources, particularly water.

Strategic Investment And Market Resilience

Vrachimis concludes that sustained growth will depend on targeted investment, product upgrading, and continued market diversification. Strengthening year-round offerings, improving infrastructure capacity, and promoting higher-value experiences can help balance demand while preserving long-term competitiveness. These measures are essential not only to manage overtourism risks but also to ensure tourism remains a stable pillar of Cyprus’ economic development.

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