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Cyprus Posts Third Highest GDP Surge in Q2 2025: Employment and Productivity on the Rise

Strong Economic Momentum in Cyprus

In the second quarter of 2025, Cyprus recorded a 3.3 percent increase in its gross domestic product, securing the position of the third highest GDP growth rate within the European Union. This performance comes on the heels of Ireland’s impressive 18 percent surge and Bulgaria’s 3.4 percent rise, underscoring Cyprus’ robust economic advancement despite a modest 0.5 percent increase from the previous quarter.

Comparative Analysis Within the European Union

Eurostat’s data reveals a broader picture of economic strides across the EU. Seasonally adjusted GDP growth reached 1.5 percent in the eurozone and 1.6 percent in the EU overall compared to the same quarter in 2024. Furthermore, modest quarter-on-quarter gains of 0.1 percent in the eurozone and 0.2 percent in the EU highlight the region’s gradual recovery following stronger quarterly performances earlier in the year.

Advancements in Employment Metrics

Equally noteworthy is the rise in employment figures within Cyprus, where the nation marked the fifth largest increase in the EU. Employment expanded by 1.8 percent year-on-year and showed a 0.5 percent growth from the previous quarter. This dual expansion in GDP and employment serves as a key indicator of rising labour productivity and economic resilience across the region.

Labour Productivity Improvements

Labour productivity experienced upward momentum, with per capita productivity increasing by 0.8 percent in the eurozone and 1.2 percent across the EU compared to the same period in 2024. Additionally, productivity measured in terms of hours worked surged by 1.1 percent in the eurozone and 1.5 percent in the EU. Cyprus, in particular, showcased a robust 2.2 percent year-on-year productivity gain based on hours worked, ranking third in the EU, although it witnessed a slight 0.2 percent dip from the previous quarter.

Global Benchmarks and Strategic Implications

On a global scale, these developments are mirrored by trends such as the United States’ 2.1 percent year-on-year GDP growth, emphasizing the competitive landscape and underlying shifts in economic performance. The combined figures on GDP and employment not only highlight shifts in regional productivity but also provide crucial insights for policymakers and business leaders aiming to navigate the evolving economic environment.

Central Bank Of Cyprus Balance Sheet Reflects Strong Eurosystem Position

Overview Of Financial Stability

The Central Bank of Cyprus (CBC) has released its latest balance sheet, reaffirming its steadfast role within the Eurosystem. The balance sheet, featuring total assets and liabilities of €29.545 billion, underscores the institution’s stable financial posture at the close of January 2026.

Asset Allocation And Strategic Holdings

Governor Christodoulos Patsalides issued the balance sheet, which details the CBC’s asset composition under the Eurosystem framework. Notably, the bank’s gold and gold receivables amounted to €1.635 billion, providing a significant hedge and stability to its balance sheet. Additional asset categories include claims on non-euro area residents denominated in foreign currency at €1.099 billion, while claims on euro area residents in both foreign and domestic currency add further depth to its portfolio.

The most substantial asset category, intra-Eurosystem claims, reached €19.438 billion, an indication of the CBC’s deep integration with its European counterparts. Furthermore, euro-denominated securities held by euro area residents contributed €6.587 billion. Despite a marked emphasis on these areas, lending to euro area credit institutions in monetary policy operations recorded no activity during the period.

Liability Structure And Monetary Policy Implications

On the liabilities side, banknotes in circulation contributed €3.218 billion. Liabilities to euro area credit institutions associated with monetary policy operations were notably the largest single category, totaling €17.636 billion. Supplementary liabilities included those to other euro area residents, which aggregated to €4.989 billion, with government liabilities playing a predominant role at €4.754 billion.

Other liability items, such as claims related to special drawing rights allocated by the International Monetary Fund at €494.193 million, and provisions of €596.571 million, further articulate the CBC’s exposure. Revaluation accounts stood at €1.643 billion, and overall capital and reserves were confirmed at €333.822 million, completing the picture of a well-capitalized institution.

Conclusive Insights And Strategic Alignment

The detailed breakdown illustrates the CBC’s sizeable intra-Eurosystem exposures, reinforcing its central role within Europe’s monetary landscape. With an asset-liability balance maintained at €29.545 billion, the CBC’s financial position remains robust, indicating a commitment to structural stability and strategic risk management.

This fiscal disclosure not only provides transparency into the CBC’s operations but also serves as a benchmark for comparative analysis among other central banks within the Eurosystem, highlighting the intricate balance between asset liquidity, regulatory oversight, and monetary policy imperatives.

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