cyprus economy — cyprus economy — Cyprus continues to demonstrate impressive economic performance, emerging as one of the top economic performers in the European Union during the latter part of last year. According to Eurostat, the island recorded a 1.4 per cent increase in its Gross Domestic Product (GDP) for the fourth quarter of 2025 compared to the previous three months.
This remarkable growth placed Cyprus alongside Croatia with the third-highest rate in the EU, trailing behind Malta’s 2.1 per cent and Lithuania’s 1.7 per cent. While the euro area and EU saw modest increases of 0.2 per cent in GDP during the same quarter, the figures indicate a cooling of momentum compared to the third quarter of 2025.
Cyprus economy: Tourism Sector Remains Steady
Despite concerns about regional tensions, particularly in the context of the ongoing conflict in Iran, the Famagusta regional tourism board (Etap) urged calm. The board acknowledged some hotel booking cancellations but reassured that these would not significantly impact the summer tourism season. They stressed that the situation has been exaggerated and that Cyprus is not a prime target amid these geopolitical tensions.
Deputy Tourism Minister Kostas Koumis echoed similar sentiments, noting that Cyprus remains a safe destination for tourists. While he acknowledged the uncertainty stemming from conflicts in the region, Koumis highlighted that discussions with industry partners showed continued confidence in Cyprus as a tourist spot.
Shifts in Lending and Employment
In a related economic update, the Central Bank of Cyprus reported a significant decline in total net new loans in January 2026, dropping by €377.7 million from the previous month. This decrease was accompanied by a slight rise in interest rates for consumer and housing loans. Despite this, net new housing loans showed a decline of €39.7 million, indicating a cautious approach to borrowing among consumers.
On a brighter note, total employment in Cyprus saw a year-on-year increase of 2 per cent during the fourth quarter of 2025, reaching approximately 519,116 individuals. This growth was primarily driven by sectors such as wholesale and retail trade, construction, and manufacturing, showcasing a vibrant job market even amid global uncertainties.
Energy Market Challenges
The ongoing conflict in Iran, which escalated with large-scale air strikes on February 28, 2026, has started to disrupt global energy markets, creating short-term challenges. However, experts like Andreas Poullikkas believe that while turbulence is expected, a prolonged crisis is less likely due to market resilience and existing reserves.
Steady Industrial Performance
In the industrial sector, Cyprus recorded a 4.9 per cent increase in its industrial turnover index in December 2025 compared to the previous year. Manufacturing emerged as the leading contributor to this growth, indicating a robust industrial base that continues to thrive despite external challenges.
Educational Reforms and Workforce Development
In an effort to strengthen the workforce, the Cyprus Employers and Industrialists Federation (Oev) has launched a new committee focused on education and attracting young talent. This initiative aims to align educational practices with market needs, ensuring that Cyprus maintains a competitive edge in a rapidly evolving economic landscape.
Shipping Sector Under Scrutiny
The shipping industry is keeping a close watch on developments in the Persian Gulf, where Cypriot vessels have been stranded due to rising tensions. The Cyprus Shipping Chamber reported no incidents or casualties to date, but concerns remain regarding the safety of crews in the region.
Regulatory Changes in Finance
The Cyprus Securities and Exchange Commission (CySEC) has initiated a public consultation on proposed amendments to its directive concerning the register of beneficial owners of express trusts. This move aims to align regulations with EU standards while ensuring that access to beneficial ownership information is restricted to those with legitimate interests.
