Robust Growth Redefines The Economy
KPMG Cyprus Partner Christophoros Anayiotos said Cyprus’ technology sector has evolved into one of the country’s main economic growth drivers, with its contribution projected to reach €5.9 billion, or 16.2% of GDP, by 2025.
Speaking at the TechIsland Summit, Anayiotos presented findings from KPMG Cyprus’ 2025 economic impact assessment, which examined the expanding role of technology and ICT activities within the Cypriot economy.
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Sectoral Contributions And Economic Impact
According to the report, the sector’s total gross value added is expected to reach €5.5 billion, accounting for approximately 17% of Cyprus’ overall GVA. Information and communication technology activities contribute the largest share at €4.1 billion, followed by professional, scientific and technical services at €875 million and financial and insurance activities at €604 million.
KPMG estimates that when indirect and induced economic effects are included, the sector’s broader impact rises to €11.9 billion. The findings highlight the increasing influence of technology across multiple areas of the economy.
Transforming The Labor Market
Employment growth in the technology sector has also accelerated significantly. The report showed that direct technology employment expanded at a compound annual growth rate of 9.7% between 2016 and 2025, reaching approximately 48,200 jobs. That workforce includes around 31,700 Cypriot nationals, 4,100 employees from other EU countries and 12,400 non-EU professionals. Growth among non-EU employees reached 30.1% annually during the period, considerably faster than the 6.2% annual growth recorded among Cypriot workers. Combined with indirect employment effects, the sector currently supports roughly 79,000 jobs across Cyprus.
Driving Investment And Innovation
Technology and ICT activities have also become increasingly important for foreign direct investment. The sector now represents 17% of Cyprus’ inward FDI stock, making it the country’s third-largest destination for foreign investment after financial services and real estate. Cyprus currently ranks third among EU member states in ICT contribution to total gross value added at 12.5%, well above the EU average of 5.6%. The report also noted that GVA per ICT employee in Cyprus is approximately 36% higher than the EU average, reflecting relatively strong productivity levels.
Challenges And Future Directions
Despite the sector’s rapid expansion, the report identified several structural challenges, including dependence on high-tech imports, relatively low private-sector research and development spending and limited financing availability for innovation projects. Lower patent and industrial design activity compared with other EU countries also remains a concern. Anayiotos called for greater investment in digital infrastructure, STEM education and workforce development to support long-term sector growth. Additional recommendations included improving international connectivity, strengthening Cyprus’ positioning as an ICT hub and advancing integration with the Schengen Area.
Conclusion
KPMG’s analysis highlights the increasingly central role technology plays in Cyprus’ economy through its contribution to GDP, employment and foreign investment. The report also suggests that sustaining future growth will depend on continued investment in skills development, infrastructure and innovation capacity.
