20/4/2025

ECONOMIC NEWS

The International Monetary Fund (IMF)  revised down its forecast for Cyprus’ economic growth, projecting a rate of 2.5 per cent of GDP in 2025.

This is significantly lower than its previous estimate of 3.1 per cent and the projection of the Finance Ministry.

The sharp increase in global tariffs, along with rising uncertainty, is the main reason.

Cyprus’ inflation is now projected to remain at 2.3 per cent, an upward revision from the October estimate of 2 per cent.

The IMF is more optimistic about Cyprus’ current account balance, revising the expected deficit for 2025 down from 8.3 per cent to 7.3 per cent of GDP.

It also anticipates lower unemployment, predicting it will drop to 4.8 per cent in 2025 from 5.1 per cent previously estimated.

Cyprus recorded the second highest budget surplus among European Union member states in 2024, according to Eurostat.

It ties with Ireland, with both countries reporting a surplus of 4.3 per cent of GDP, just behind Denmark, which led with a surplus of 4.5 per cent.

21 of the EU’s 27 member states recorded budget deficits during the year.

In addition to its strong surplus performance, Cyprus also achieved a robust reduction in public debt.

By the end of 2024, public debt fell to 65 per cent of GDP, down from 73.6 per cent in 2023.

In absolute terms, this amounted to a drop from €23.08 billion to €21.82 billion.

In contrast, the public debt ratio in the eurozone rose slightly, increasing from 87.3 per cent at the end of 2023 to 87.4 per cent by the close of 2024.

Central Bank of Cyprus (CBC) governor Christodoulos Patsalides has warned that the United States’ decision to impose high tariffs on imports globally is exacerbating international economic uncertainty, with potential medium-term consequences for Cyprus.

While Cyprus currently faces limited direct impact due to the low volume of goods trade with the US, Patsalides cautioned that secondary effects could emerge.

“There may be consequences for Cypriot exports of goods and services due to reduced economic activity among our trading partners,” he explained.

These effects could escalate further if tariffs or retaliatory measures extend into the services sector, a crucial component of the Cypriot economy.

Cyprus has secured €1.8 billion for its new “THALIA 2021-2027” programme, marking the largest EU funding package received since the country joined the European Union in 2004.

The European Commission approved the programme in July 2022, with €969 million coming from EU funds and the remainder from the national budget.

Approximately €600 million has already been allocated to more than 100 projects either completed or underway.

Officials predict the programme will generate a 6% increase in GDP and create 8,500 new jobs by 2029, focusing on green and digital transitions, local development, employment and social inclusion.

According to an official of the Federation of Employers and Industrialists (Oev), they are prioritising internationalisation as a strategic pillar for strengthening the competitiveness of local businesses.

And encourage Cypriot businesses to take part in international exhibitions and trade missions. 

A business delegation of Cypriot IT companies was in Greece recently while a similar initiative is now being prepared for Qatar

07/04/25

ENERGY NEWS

Greek media reported that Greece’s power grid operator ADMIE (operator of the Great Sea Interconnector) has requested the issuance of a Navtex from the Greek foreign ministry to resume seabed surveys, nearly 40 days after the project was put on hold. The suspension occurred after Greece decided to withhold a 36 million euro payment to Nexans, the cable manufacturer. This figure does not include the estimated 20 million euro cost incurred due to the two-month inactivity of the survey vessels. Nexans has reportedly played a crucial role in pushing for the project’s continuation, with its demands for progress putting pressure on the Greek side to find an immediate resolution. High-level political talks have also taken place between Greece, France, and Israel to revive the project and bolster it against geopolitical risks.

Assurances received by the Greek Prime Minister during his recent visits to Paris to meet French President Emmanuel Macron, and to Tel Aviv for discussions with Israeli Prime Minister Benjamin Netanyahu, are understood to have contributed to this renewed momentum.

Turkey has voiced strong opposition, calling it a “unilateral fait accompli” that will not be tolerated, according to security sources cited by pro-government daily Turkiye.

Turkish diplomatic and military officials argue the cable project infringes upon international maritime law and breaches the principles governing maritime jurisdictions. In response, Ankara is expected to dispatch research vessels back into international waters east of the Greek islands of Kasos and Karpathos.

President Nikos Christodoulides and ExxonMobil’s vice president for global exploration John Ardill met to discuss the next steps regarding drillings.

ExxonMobil, alongside QatarEnergy, holds the rights to drill in Block 5 and Block 10 of the Republic of Cyprus’ exclusive economic zone (EEZ) .

The two rounds of drilling have already been completed in Block 10, which confirmed the existence of quantities of natural gas in the ‘Glaucus’ natural gas deposit while drilling is already underway in Block 5.

The government is now awaiting the results of this drilling. 

The possibility of collaboration with companies managing neighbouring fields was also discussed.

President Nikos Christodoulides said he is “ready” to discuss the prospect of delineating the Republic of Cyprus’ maritime borders with the Republic of Turkey, if the Turkish government is also ready.

Turkey does not recognise the Republic of Cyprus and is not a signatory to the United Nations convention on the law of the sea (Unclos), citing disputes with Greece in the Aegean Sea, as the country does not believe that islands have an inherent right to full exclusive economic zones (EEZ) of their own. The lack of Turkish presence in the sea when ExxonMobil and QatarEnergy began drilling in Block 5 was criticized by Turkish MPs, for their country’s perceived lack of action. Ruling AK Party deputy leader Leyla Sahin Usta explained that according to maritime claims recognised by the Turkish government, Block 5 belongs to Egypt and not Turkey, and that thus it is not Turkey’s place to protest against or attempt to stop ExxonMobil and QatarEnergy’s operations.

Cyprus is an “attractive gateway for energy investment”, Energy Minister George Papanastasiou said, speaking at the Capital Link Cyprus business forum in New York.

He referred to the recent agreements signed between Cyprus and Egypt, one of which concerns the ‘Aphrodite’ deposit in Block 12 of Cyprus’ EEZ, and the other of which is a ‘host government agreement’, signed by Cyprus, Egypt and the consortium comprising Total & Eni for Block 6 of Cyprus’ EEZ. He also spoke about the ongoing Great Sea Interconnector project, saying there is “significant investment interest in the project from countries such as the United Arab Emirates and France”.

ECONOMIC NEWS

Finance Minister Makis Keravnos sounded the alarm, describing the current economic situation as alarming, following the announcements of US tariffs with its trading partners. He warned that Cyprus’ economy, which heavily depends on services and tourism, is at risk as the European Union grapples with shifting trade dynamics. He highlighted that major EU economies, already showing signs of recession, could drag Cyprus into a broader economic downturn. The potential stagnation of key trading partners, particularly large economies like France, could have a direct and significant impact on the island.

Philenews reported that Cyprus may not be directly affected at this stage by the trade war declared by US President Donald Trump, however, the Ministry of Finance has begun looking into the possible impacts that will arise in the medium term.

What is worrying is the impacts that other countries that are considered close partners for Cyprus will have. There is great concern about a possible explosion of inflation and the possibility of the tourism industry and the service sector being affected. Exports to the US are limited and in the region of 23 million euros.

Politis reported that it has now become clear that the cases of usurpation of Greek Cypriot properties in the occupied territories, which are before the courts, are increasing the pressure on the Turkish Cypriot leader Ersin Tatar.

At every opportunity, Tatar brings up the issue of the criminal prosecution of the usurpers, where he indirectly but clearly asks the President of the Republic to intervene and suspend the ongoing proceedings.

Meanwhile, the trial of German lady accused of usurpation of Greek Cypriot properties in the occupied North will continue on the 11/04/25.

Tourism revenue in Cyprus reached €69.2 million in January 2025, marking a 53.1 per cent year-on-year rise when compared to January 2024.

The rise in income was largely driven by a significant surge in tourist arrivals from Israel and the United Kingdom. Israeli tourists, who represented the largest share of the market in January 2025 with 21.1 per cent of total arrivals, spent an average of €176.13 per day, up from €118.34 in January 2024. British tourists—the second-largest group at 16.7 per cent—spent an average of €57.75 daily

The per capita spending by tourists also rose markedly. 

In January 2025, visitors spent an average of €617.65 each, compared to €513.52 in the same month the previous year—an increase of 20.3 per cent.

Cyprus risks moving beyond food price inflation to actual food insecurity if it fails to reduce its agricultural sector’s reliance on weather conditions, the General Secretary of farmers’ union EKA, Panikos Hambas, has warned.

He emphasised the necessity of making farmers less dependent on weather patterns, highlighting the need for substantial investments in the maintenance of existing dams, the construction of new ones, and the development of numerous desalination plants.

President Nikos Christodoulides rang the New York stock exchange closing bell at the close of business last Friday.

His participation in the ceremony was described as “an emblematic ceremony with intense symbolism” as he continued his visit to encourage US investment in Cyprus.

But he had the misfortune to close the markets at the end of one of the worst weeks for trading in recent memory.