Category: Cyprus News Agency

GDP Growth Accelerates in Q2 on Strong Consumption and Investment

Despite the deterioration in the global economic environment following the outbreak of the US-Iran war, the Cypriot economy remained resilient in Q2 2026, with GDP growth accelerating to 3.3%YoY, from 3.0%YoY in the previous quarter. This was the fourth-highest growth rate in the Euro Area. According to the expenditure breakdown, growth was primarily driven by household consumption (+5.4%YoY) and gross fixed capital formation (+9.4%YoY). The latter was supported mainly by a surge in investment in transport equipment (+151.9%YoY), while residential investment increased at a more moderate pace (+4.3%YoY). Household spending continued to benefit from favourable labour market conditions, with unemployment remaining close to record lows for this period of the year (3.6% in Q2 compared to 3.2% in Q2 2008), alongside robust consumer credit growth (+12.0%YoY) and strong wage dynamics (+3.9%YoY in hourly wage costs, the strongest increase in five quarters). Private consumption has traditionally been a key and stable driver of Cyprus’s economic growth, with the current contribution consistent with past expansionary periods.

Government consumption also contributed positively to growth, expanding by 4.5%YoY. Exports increased by 9.6%YoY, supported primarily by services exports. Nevertheless, the external surplus narrowed by 45.1%YoY, as imports rose by 12.9%YoY, largely reflecting the aforemantioned increase in transport-related investment. Thus, despite the strong performance of services exports, the external sector acted as a drag on GDP growth as the increase in imports more than offset the export contribution. On the production side, the acceleration in GDP growth was driven mainly by higher activity in wholesale and retail trade, ICT services, financial and insurance activities, and construction.

Contribution of GDP components to growth

Source: Cystat, Eurobank Research

Looking ahead, there are signs that economic momentum remained robust at the start of Q3 despite the ongoing geopolitical tensions in the Persian Gulf. On the investment side, real estate sales increased by 10.7%YoY in July-August, bringing the year-to-date growth rate to 13.7% and placing the market on track for a new all-time high. Strong demand is also evident in residential property prices, which rose by 8.5%YoY in Q2, lifting the residential property price index to a record high. This buoyant demand is being driven primarily by non-resident buyers, who accounted for 59% of the increase in property sales during January-August. As a result, construction activity is expected to remain strong to meet demand; during January-May, an expansion of 43.1% YoY was recorded in surface terms. In addition, transport equipment and intellectual property investment are expected to support capital formation during the remainder of 2026, through base effects.

Export performance has also proven more resilient than initially anticipated. The sharp decline in tourist arrivals recorded in March-April (-28.6%YoY) moderated significantly in June (-1.7%YoY) and July (-1.1%YoY), before widening only slightly in August (-3.3%YoY). As a result, tourist arrivals were down by 7.0% YoY during January-August, broadly in line with the 4.7%-5.8% decline projected in the previous Cyprus Insights newsletter. Under this scenario, tourism activity would remain above 2024 levels despite the challenging geopolitical environment. Real estate and intellectual property services are also expected to continue providing support to exports growth.

The outlook for household consumption remains subject to opposing forces. On the one hand, inflationary pressures re-emerged in August, with headline inflation accelerating to 5.2%YoY, from 4.4%YoY in July, largely driven by higher energy prices, despite the continued implementation of energy-related support measures. These developments increase uncertainty regarding the inflation outlook once such measures are gradually withdrawn. On the other hand, labour market conditions remain broadly supportive. As noted above, the unemployment rate remained close to historical lows in Q2 despite a 9.4%YoY increase in the number of registered unemployed persons. Encouragingly, unemployment declined relative to the previous quarter even though the labour force expanded by 1.6%QoQ, with non-residents accounting for 65.1% of the increase. This suggests that Cyprus continues to attract foreign workers, an important development given the persistent labour shortages that the country needs to tackle, reflected in the still-elevated job vacancy rate (2.6% in Q2 2026). Moreover, there are signs that labour market conditions improved further during Q3, as the annual increase in registered unemployment moderated to 6.5% in July-August.

Another indication of the resilience of Cyprus’s domestic fundamentals and favourable medium-term macroeconomic outlook is the recent sovereign rating upgrade by S and P to A from A-, accompanied by a positive outlook. According to the agency, the upgrade reflects the country’s continued external and fiscal deleveraging, which is underpinned by strong real economic growth.

The EU’s energy security ahead of the winter and the European Commission’s proposal regarding network charges will be among the issues that EU Ministers of Transport, Telecommunications and Energy will discuss in Luxembourg on Thursday. Cyprus will be represented by Minister of Energy, Commerce and Industry Michalis Damianos.

According to a press release by the Ministry of Energy, the Council’s agenda includes a discussion on the European Commission’s proposal for a Regulation regarding network charges, which aims to reduce electricity prices. The proposal focuses on digitalization through the deployment of smart grids and smart meters and on improving network tariff structures, with the goal of making network usage more transparent and cost-effective.

Moreover, Energy Ministers will examine the EU’s energy security, both in preparation for the 2026-2027 winter and from a longer-term perspective, taking into account pressures on energy supply and prices linked to Russia’s war against Ukraine and the conflict in the Middle East, as well as long-term challenges, particularly those related to climate change and the resilience of the energy system.

Regarding the energy framework beyond 2030, the Ministers will exchange views on the EU’s future energy architecture and potential targets for energy efficiency, renewable energy sources, interconnections, and electrification, in the context of the EU’s 2040 climate target, the press release concludes.

Cyprus and China are seeking to expand economic and business cooperation in investment, technology, shipping, tourism, renewable energy and local government, with new opportunities highlighted during the Cyprus-China Cooperation and Business Forum held at the Cyprus Chamber of Commerce and Industry (CCCI) in Nicosia on Tuesday.

Bilateral trade between Cyprus and China reached $1.44 billion in 2025, recording an annual increase of 26%, according to Chinese Ambassador to Cyprus Yang Yundong.

Addressing the forum, the Ambassador said China had become Cyprus’ fourth-largest trading partner and third-largest source of imports. He also noted that Cypriot products, including halloumi, zivania and juices, are increasingly finding their way into the Chinese market.

Yang highlighted considerable potential for further cooperation in shipping, tourism, green development and the digital economy, while emphasising Cyprus’ strategic role as a bridge between China and the European Union.

The Ambassador also pointed to emerging opportunities in China’s economy, particularly in artificial intelligence, robotics and other innovative industries.

CCCI President Stavros Stavrou, whose address was delivered by CCCI Secretary General Philokypros Roussounides, emphasised the importance of transforming strong bilateral relations into concrete commercial partnerships.

Stavrou described Cyprus as an attractive gateway for Chinese businesses seeking access to the European single market, highlighting its strategic location at the crossroads of Europe, Asia and Africa, its skilled workforce, professional services and established legal and regulatory framework.

At the same time, he noted that China represents an important market for Cypriot businesses and a global centre for technology, innovation, manufacturing and investment.

Nicosia Mayor Charalambos Prountzos outlined opportunities for cooperation with Chinese cities and companies in renewable energy, smart-city technologies and research.

The Mayor also announced that an agreement is scheduled to be signed on Friday, under the auspices of the Ministry of Education in Beijing, aimed at connecting academic and research institutions in Nicosia with counterparts in Chinese cities. Highlighting the capital’s competitive advantages, he referred to its six universities, six centres of excellence and approximately 50,000 students.

President of the Union of Cyprus Municipalities and Mayor of Larnaca Andreas Vyras emphasised the importance of strengthening cooperation between local authorities in Cyprus and China.

He identified smart cities, waste management, urban planning and sustainable development as areas where municipalities face common challenges and could benefit from exchanging expertise.

Invest Cyprus Director General Marios Tannousis presented Cyprus’ economic performance and growing attractiveness as an international investment destination.

He said the information and communications technology sector contributes more than pound 4 billion annually to the Cypriot economy, representing approximately 15-16% of GDP.

Tannousis also highlighted increasing foreign direct investment and the growth of shipping, education, financial services and tourism. He described Cyprus as a potential regional logistics, business and investment hub for Chinese companies seeking access to the European Union, the Middle East and North Africa.

Cyprus-China Business Association President Theodoros Parperis emphasised the opportunities for expanding bilateral trade and investment.

He highlighted Cyprus’ geographical advantages, business-friendly environment and growing professional and digital services sectors as important factors for Chinese companies considering regional expansion.

Parperis said the Association has more than 200 members and continues to promote business relations through trade missions, conferences and networking events in both countries. He also announced preparations for a new initiative in China, expressing hope that it would take place soon.

European Commissioner for Fisheries and Oceans Costas Kadis will be in Cyprus this week for a series of engagements, according to the agenda published by the European Commission.

Kadis will attend on Thursday a Circular Water Conference, hosted by the University of Cyprus, where he will deliver the keynote speech on Fisheries and Oceans.

On the sidelines of the conference, the Commissioner will meet with Elias Myrianthous, Commissioner for Environment and Animal Welfare of the Republic of Cyprus.

On Friday, Commissioner Kadis will visit the Zygi fishing harbour, where he will have the opportunity to speak directly with members of the local fishing community.

This will be followed by a meeting with representatives of the fishing sector at the Zygi Community Council, with the aim of exchanging views on the challenges faced by fishermen and the future of sustainable fishing.

Later on Friday, Commissioner Kadis will attend the ceremony for the School of Marine Sciences at the Cyprus University of Technology in Larnaca.

“The event will highlight the importance of marine research, scientific knowledge, and education for the sustainable development of the maritime sector,” the European Commission said.

FOR THE PERIOD FROM 0000 28/10/2026 UNTIL 2400 28/10/2026

Area covered is 8 kilometers seawards.

Winds are in BEAUFORT scale. Times are local times.

Atmospheric pressure at the time of issue: 1014hPa (hectopascal)

Low pressure starts affecting the area. The weather will be at times mainly cloudy with isolated and later local showers and isolated thunderstorms. IN STORM THE WIND IS EXPECTED TO BE VARIABLE STRENGTHENING, WITH RISK GUSTING TO 7 TO 8 BEAUFORT.

Visibility: Good, but moderate to poor in showers

Sea surface temperature: 25°C

Warnings: NIL

AREA PERIOD WIND STATE OF SEA

West Coast

Night Northeast to Southeast 3, at times locally 3 to 4 Smooth to Slight, at times locally Slight

Morning Southeast to Southwest 3 to 4, at times 4 Slight

Afternoon Southeast to Southwest 3 to 4, at times locally Variable 4 Slight

Tonight East to Southeast 4 to 5, gradually Southeast to Southwest Slight, gradually Slight to Moderate

South Coast

Night Northwest to North 3, at times locally Southwest to West Smooth to Slight

Morning Northwest to North 3, gradually Southeast to Southwest 3 to 4 Smooth to Slight

Afternoon South to Southwest 3 to 4, locally 4 to 5 Smooth to Slight, locally Slight

Tonight Southeast to Southwest 3 to 4, later 4 to 5 Slight

East Coast

Night Northwest to North 3, at times West to Northwest Smooth to Slight

Morning Southwest to Northwest 3, later Southwest 3 to 4 Smooth to Slight

Afternoon South to Southwest 4, at times 4 to 5 Smooth to Slight

Tonight Southeast to Southwest 4, at times 4 to 5 Smooth to Slight, at times Slight

North Coast

Night Southeast to Southwest 3, at times locally 3 to 4 Smooth to Slight, at times locally Slight

Morning Southeast to Southwest 3 to 4 Smooth to Slight, locally Slight

Afternoon Southwest to Northwest 3 to 4, at times South to Southwest 4 Smooth to Slight, at times Slight

Tonight Southeast to Southwest 3 to 4, gradually 4 to 5 Slight

Total deposits recorded a significant net increase of pound 697.1 million in September, compared to the previous month, while loans increased by pound 857.8 million, of which pound 470.8 million are loans to Cypriot residents.

According to the Central Bank of Cyprus, total deposits in September 2026 recorded a net increase of pound 697.1 million, compared with a net increase of pound 171.5 million in August 2026.

The annual growth rate of total deposits stood at 6.5%, remaining unchanged compared with August 2026. The outstanding amount of total deposits reached pound 60.2 billion in September 2026.

Deposits of Cyprus residents exhibited an increase of pound 639.9 million. Deposits of households and non-financial corporations increased by pound 93.8 million and pound 373.0 million respectively. Deposits of the remaining domestic sectors exhibited a total increase of pound 173.1 million.

Total loans in September 2026 recorded a net increase of pound 857.8 million, compared with a net increase of pound 114.6 million in August 2026. The annual growth rate of total loans stood at 14.0%, compared with 11.8% in August 2026. The outstanding amount of total loans reached pound 29.6 billion in September 2026.

Loans to Cyprus residents recorded an increase of pound 470.8 million. Loans to households and non-financial corporations increased by pound 52.2 million and pound 110.1 million respectively. Loans to the remaining domestic sectors had a total increase of pound 308.5 million, the Central Bank of Cyprus says.

The number of people killed in road accidents in Cyprus reached 45 in 2025, an increase of 10% compared with 2024, according to final data published on Tuesday by the European Commission’s Directorate-General for Mobility and Transport.

Cyprus recorded 45 road deaths per million inhabitants, slightly above the EU average of 43 deaths per million inhabitants.

Despite the year-on-year increase, road deaths in Cyprus were 13% lower than in 2019 and 12% lower compared with the average for the 2017-2019 period.

Provisional data for the first half of 2026 show a significant decline of more than 10% in road deaths in Cyprus compared with the same period in 2025. The Commission notes, however, that in the case of Cyprus, the change in the absolute number of fatalities was fewer than ten and that the 2026 figures remain provisional.

Both phases of the Paphos-Polis Chrysochous highway are expected to be put out to tender in 2027, Government Spokesperson Konstantinos Letymbiotis said on Tuesday evening, while outlining developments concerning the Paphos Marina project at the Paphos Chamber of Commerce and Industry’s (PCCI) General Assembly.

Addressing the meeting, Letymbiotis said the highway had been sought by the Paphos district for decades, noting that the Government was working to move the project forward following problems with the previous contract.

The highway’s planning dates back to 1990, while studies carried out in 2007 envisaged its completion in 2013. The contract signed in 2021, worth pound 73 million, provided for completion by November 2024. However, by January 2023, less than 4% of the contracted work had been completed, according to the figures presented by the Spokesperson.

By October 2024, progress had reached 21.1%, while the contractor was seeking an additional pound 36.2 million in compensation and a 59-month extension.

‘The announcement of a project takes a few minutes. Its implementation requires solid foundations, responsible decisions and continuous supervision,’ Letymbiotis said, adding that getting a troubled project back on track could be more difficult than planning one from scratch.

The planned four-lane highway will run in two phases, from Agia Marinouda to Stroumbi and from Stroumbi to Polis Chrysochous. Expropriations and the environmental assessment for the first phase have been completed. A meeting between the Transport Minister, the PCCI and other stakeholders is scheduled for early November to discuss the updated plans.

Regarding Paphos Marina, Letymbiotis said a decision on the evaluation of expressions of interest is expected in early November, with the concession agreement due to be signed in 2027. He also referred to plans to expand Paphos Airport and build a desalination plant in Kissonerga with a daily capacity of 12,000 cubic metres.

On the economy, Letymbiotis said Cyprus had ranked among the EU’s two fastest-growing economies for three consecutive years. Growth reached 4.8% in 2025, more than three times the EU average, while public debt is projected to fall below 49% of GDP in 2026. Unemployment is forecast at 3.8%, and median earnings have risen by around 15%, he added.

PCCI President George Mais called for faster progress on major infrastructure projects, lower energy costs and reduced bureaucracy. Announcing the end of his term, he said he intends to run for vice-president of the Cyprus Chamber of Commerce and Industry in elections on December 5.

For his part, PCCI Director Marinos Stylianou highlighted the Chamber’s role in supporting local businesses and economic development.

Cyprus Chamber of Commerce and Industry President Stavros Stavrou also cited bureaucracy, staff shortages, access to finance and energy costs as key business challenges, stressing the need for a stable and business-friendly environment.

CYPRUS DEPARTMENT OF METEOROLOGY

FORECAST FOR THE SEA AREA OF CYPRUS (A)

FOR THE PERIOD FROM 0600 27/10/2026 UNTIL 0600 28/10/2026

Area covered is 8 kilometers seawards.

Winds are in BEAUFORT scale. Times are local times.

Atmospheric pressure at the time of issue: 1012hPa (hectopascal)

Low pressure is starting to affect the area. The weather will be at times mainly cloudy and tomorrow isolated showers or a thunderstorm are expected, initially west and north coasts with risk of affecting the east coasts late in the afternoon.

Visibility: Good, but moderate to poor in showers

Sea surface temperature: 25°C

Warnings: NIL

AREA PERIOD WIND STATE OF SEA

West Coast

Morning Southwest to West 3 to 4, at times locally 4 Smooth to Slight

Afternoon West to Northwest 4 Slight

Night Northwest to Northeast 3 Smooth to Slight

South Coast

Morning Southwest 3 to 4, at times locally 4 Smooth to Slight

Afternoon Southwest 4, at times locally 4 to 5 Slight

Night Northwest to North 3 Smooth to Slight

East Coast

Morning Southwest to Northwest 3, later Southeast to Southwest 3 to 4 Smooth to Slight

Afternoon South to Southwest 3 to 4, at times offshore 4 Smooth to Slight, at times offshore Slight

Night Northwest to North 3 Smooth to Slight

North Coast

Morning Southwest to West 3, gradually 3 to 4 Smooth to Slight

Afternoon Southwest to Northwest 3 to 4, at times locally 4 Slight

Night Southeast to Southwest 3 Smooth to Slight

President of the Republic, Nikos Christodoulides, spoke of a “very good and constructive discussion” with Tufan Erhrman, which will continue during the visit to Cyprus of Personal Envoy of the UN Secretary-General to Cyprus, María Ángela ??lguín.

President Christodoulides was speaking to journalists upon his return to the Presidential Palace on Tuesday afternoon after the meeting he had with the Turkish Cypriot leader.

According to the President, with a view to continuing the discussions in the presence of ??lguín, the two leaders agreed not to make any further statements on any specific issues and not to issue a joint communiqué.

He added that constructive joint meetings had taken place with the two Technical Committees on Youth and Cultural Heritage, and subsequently with the Civil Society Advisory Body, during which a number of views and suggestions were put forward, which will be discussed during the meetings with the Turkish Cypriot leader.

Asked to confirm that the fact that a joint communiqué was not issued was not the result of an impasse, President Christodoulides reiterated that this was a mutual agreement.

‘I repeat, it was a good and constructive discussion, which will continue while Ms ??lguín is in Cyprus, and I ask you – I fully appreciate your role – not to question me on any matter,’ he concluded.

A meeting between the President of the Republic and the Secretary-General’s personal envoy is scheduled for this coming Friday, and a joint meeting between the President of the Republic, the Turkish Cypriot leader and ??lguín has already been set.

Cyprus has been divided since 1974, when Turkey invaded and occupied its northern third. Repeated rounds of UN-led peace talks have so far failed to yield results. The latest round of negotiations, in July 2017 at the Swiss resort of Crans-Montana ended inconclusively.