Cyprus Economic Outlook
Service-based economy:
Cyprus has a small but well-developed economy, with a heavy reliance on tourism, shipping, and financial services. The island’s strategic location in the Eastern Mediterranean has historically made it an important trade and business hub, particularly for maritime services. Additionally, Cyprus has become a center for international banking, attracting foreign companies with its favorable tax regime.
Tourism and real estate:Tourism is a key pillar of the Cypriot economy, accounting for around 15% of GDP. The island’s warm climate, historical sites, and luxury resorts make it a popular destination for European tourists. Additionally, the real estate sector has been a major driver of foreign investment, with demand from non-EU buyers—particularly from Russia and China—fueling a property boom. However, new EU regulations and geopolitical tensions have impacted foreign demand in recent years.
Economic challenges:Cyprus has faced economic volatility, with a banking crisis in 2013 leading to a painful bailout and restructuring process. While the financial sector has since stabilized, vulnerabilities remain due to high levels of private sector debt and exposure to external shocks. Additionally, the ongoing division of the island between the internationally recognized Republic of Cyprus and the Turkish-controlled north remains a long-term geopolitical risk.
Cyprus' economic outlook:Growth prospects for Cyprus remain positive, supported by strong tourism, increased energy exploration in the Mediterranean, and EU-backed infrastructure investment. However, challenges such as banking sector risks, geopolitical uncertainty, and exposure to external economic fluctuations will need to be managed carefully to ensure sustainable long-term growth.
Cyprus' Macroeconomic Analysis:
Nominal GDP of USD 33.9 billion in 2023.
GDP per capita of USD 36,791 compared to the global average of USD 10,589.
Average real GDP growth of 4.3% over the last decade.
Sector Analysis
In 2022, services accounted for 74% of overall GDP, manufacturing 5%, other industrial activity 19%, and agriculture 2%. Looking at GDP by expenditure, private consumption accounted for 60% of GDP in 2023, government consumption 19%, fixed investment 22%, and net exports -1%.International trade
In 2021, manufactured products made up 23% of total merchandise exports, mineral fuels 49%, food 21%, ores and metals 4% and agricultural raw materials 1%, with other categories accounting for 2% of the total. In the same period, manufactured products made up 61% of total merchandise imports, mineral fuels 22%, food 14%, ores and metals 1% and agricultural raw materials 0%, with other goods accounting for 2% of the total. Total exports were worth USD 5 billion in 2023, while total imports were USD 12 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 4.3% in the decade to 2024. To read more about GDP growth in Cyprus, go to our dedicated page.
Fiscal policy
Cyprus's fiscal deficit averaged 1.6% of GDP in the decade to 2023. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 9.3% in the decade to 2024. For more information on Cyprus's unemployment click here.
Inflation
Inflation averaged 1.3% in the decade to 2024. Go to our Cyprus inflation page for extra insight.
Monetary Policy
Euro Area monetary policy rate ended 2024 at 3.15%, up from 0.05% a decade earlier. See our Cyprus monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the euro weakened by 20% vs the U.S. dollar. For more info on the euro, click here.
Economic situation in Cyprus
A detailed release confirmed that annual GDP growth eased to 2.6% in Q4 from 3.9% in Q3. Both private and public spending rose at slower rates, and exports ground to a halt. Nonetheless, fixed investment rebounded markedly. Shifting to Q1 2025, GDP growth is seen near Q4’s level, well above the Euro area average. Economic sentiment improved from Q4 in Q1, and both industrial output and goods exports recovered sharply in January. Less positively, retail sales lost steam from Q4 in the first month of the year. In politics, in March, the Republic of Cyprus and the Turkish Republic of Northern Cyprus agreed to open four border crossing points and launch joint environmental and solar energy projects. That said, a lasting agreement to end the division of Cyprus remains a distant prospect.Cyprus Economic Forecasts
Projections out to 2034.45 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 14 expert analysts.
Want to get insight on the economic outlook for Cyprus in the coming years? FocusEconomics collects projections out to 2034 on 45 economic indicators for Cyprus from a panel of 14 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Cyprus economy. To download a sample report on the Cyprus' economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.