Cyprus Business Now: tourism sector, GDP growth, employment, energy costs, CySEC
Business & economy wrap-up from the day before
Cyprus recorded a 1.4 per cent increase in its Gross Domestic Product during the fourth quarter of 2025 compared with the previous three-month period, Eurostat reported on Friday.
This performance placed the Republic of Cyprus alongside Croatia with the third-highest growth rate in the European Union, surpassed only by Malta at 2.1 per cent and Lithuania at 1.7 per cent.
On a broader scale, seasonally adjusted GDP increased by 0.2 per cent in both the euro area and the EU during the fourth quarter of 2025 when compared with the previous quarter.
These figures represent a slight cooling of momentum following the third quarter of 2025, when GDP had increased by 0.3 per cent in the euro area and by 0.4 per cent in the EU.
In an official statement, the board said that while some hotel booking cancellations have been recorded in the Famagusta district, they are not expected to significantly affect the summer tourism season.
Specifically, the board said that it observed “an unjustified dramatisation of the situation in relation to the risks that Cyprus may face” in recent days.
Moreover, Etap Famagusta said that the Republic of Cyprus is correctly taking precautionary measures to strengthen public safety, particularly against the possibility of a random attack.
“Under no circumstances should the impression be created that Cyprus is a target of major importance for Iran or its allies,” the board said.
The tourism body therefore called on the public to maintain “restraint, calm and a realistic assessment of developments”.
Specifically, the figures showed that total net new loans fell by €377.7 million compared with the previous month, while net new housing loans decreased by €39.7 million.
At the same time, the central bank reported that interest rates on both consumer loans and housing loans declined during the month.
According to the CBC, net new loans reached €247.3 million in January 2026, from total new lending of €495.9 million.
This compares with €625.0 million in net new loans recorded in December 2025, which came from total new lending of €986.9 million.
Data from the central bank also showed that net new consumer loans increased slightly to €18.9 million, from €17.2 million in the previous month.
Poullikkas, a professor of energy systems at Frederick University and former chairman of the Cyprus Energy Regulatory Authority, examined how the conflict could reshape global energy markets and what it could mean for Europe and Cyprus.
“The war in Iran has already begun to generate strong turbulence in global energy markets,” he said.
The war in Iran, which erupted on February 28, 2026, with large-scale air strikes by the United States and Israel on nuclear and energy installations in Tehran, has now moved beyond its first week and is already affecting international markets, Poullikkas explained.
“This conflict affects the supply of both oil and natural gas because Iran controls critical routes and infrastructure through which the majority of its exports pass,” he stated.
The analysis stated that Cyprus outperformed most eurozone peers in fiscal balance for a fourth consecutive year, continuing a trend seen between 2022 and 2024 when the country recorded the highest overall fiscal surplus in the eurozone.
Vassileiadis estimated that Cyprus recorded an overall surplus of 2.6 per cent of GDP in 2025 and a primary surplus of 3.7 per cent of GDP, excluding interest payments.
Although these figures marked a decline from the 2024 peaks of 4.1 per cent and 5.4 per cent of GDP respectively, Cyprus still maintained a leading position in the eurozone.
Based on fiscal balance projections in the European Commission European Economic Forecast of November 2025, Cyprus remained the top performer in overall balance terms across the eurozone in 2025.
The figures were released in a press statement on employment and national accounts covering the fourth quarter of 2025.
The figures show that total employment for the period was estimated at 519,116 persons.
Of this total, 466,265 were employees while 52,851 were self-employed.
Compared with the corresponding quarter of 2024, total employment increased by 2.0 per cent during the fourth quarter of 2025.
The strongest increases in employment were recorded in wholesale and retail trade, the repair of motor vehicles and motorcycles, construction, and manufacturing.
Domestic deliveries edged up by 0.5 per cent to 2.45 million litres, from 2.43m litres in February 2025.
Exports, however, moved lower, falling by 15.8 per cent to 84,711 litres, compared with 100,601 litres in the same month a year earlier.
The consultation paper proposes updates to the existing CySEC directive regulating the register, with the proposed amendments aiming to align the directive with planned changes to Law 188(I)/2007.
In addition, the commission said that these changes are intended to harmonise national legislation with Article 74 of Directive (EU) 2024/1640.
As part of the proposed changes, general public access to beneficial ownership information would be revoked.
“Access will be granted only to individuals or organisations that can demonstrate legitimate interest,” the regulator said.
Under the decree, students may only take up employment after completing their first academic semester and enrolling in the second, a provision aimed at ensuring the smooth continuation of their studies while allowing limited access to the labour market.
Oev said employers must submit specific documents in order to hire foreign students, including a certificate of full-time study and the student’s programme from a recognised educational institution, as well as a monthly work schedule prepared by the employer.
Speaking to Cyprus News Agency (CNA), Iosifidis said some chamber members had ships affected in the area, including large cruise vessels carrying thousands of passengers and crew, although none had reported injuries or damage so far.
“The good news,” he said, “is that no one has informed us that their ships were either hit directly or there was collateral damage, they have not informed us that they had any crew losses.”
He said the chamber’s main concern remained the safety of seafarers trapped in the region, adding that companies were trying to support both crews and their families.
The Deputy Ministry of Shipping has said that 19 Cyprus-flagged ships are blocked in the area and are safe.
Koumis said it was still too early to make firm estimates for the 2026 tourism season, noting that conflicts of this kind inevitably create uncertainty depending on their duration and escalation.
“It is too early for safe estimates. Such conflicts always create uncertainty, which evolves depending on the duration and escalation of tension,” he said.
He said Cyprus, as a tourism destination, is facing a geopolitical crisis of a different nature from those it has dealt with in previous years, while discussions with key tourism partners in Berlin suggested that confidence in the destination remains intact.
According to Koumis, the temporary reduction or cancellation of some flights in recent days was the main issue raised in meetings with airlines and tour operators, making the restoration of air connectivity the immediate priority.
The group noted that February 2025 had been a particularly strong month for both Greece and Cyprus, as the carnival period boosted demand in certain product categories.
In Cyprus, network sales, including the online store, fell by 1.8 per cent in February. However, over the first two months of 2026, they were up by 4 per cent.
In Greece, net sales of the parent company, excluding intragroup sales, rose by 6 per cent in February and, overall, by 8 per cent in the first two months of the year.
The federation said that the initiative forms part of its ongoing efforts to reinforce the capabilities of the country’s human capital and to ensure that companies in Cyprus remain competitive in a rapidly evolving economic environment.
According to the announcement, the committee is composed of representatives from businesses and organisations operating in key sectors of the economy.
The body’s mission is to contribute to the development of modern policies and practices in education, training and the attraction of new talent that respond to labour market needs and align with European developments in the field of skills.
“This agreement includes significant provisions that enhance stability, safeguard employee rights, and create modern prospects for their professional future,” a circular issued by Etyk stated.
“The institutionalisation of a four-day working week is of particular importance, which is a pioneering arrangement for the banking sector in Cyprus,” the union emphasised.
“It is a modern institution that upgrades the quality of life for colleagues and enhances the balance between professional and personal life,” the union added.
The union pointed out that the move “creates a model for the entire industry and paves the way for other organisations as well”.
The strategies aim to reinforce the competitiveness, sustainability and resilience of Europe’s maritime sector, focusing on shipping, ports and shipbuilding as key pillars of the bloc’s economy.
In a statement, the chamber said the strategies place emphasis on investments in clean fuels, digitalisation and decarbonisation technologies, as Europe seeks to modernise the maritime sector and support its transition towards more sustainable operations.
At the same time, the EU Ports Strategy aims to enhance the sustainability and competitiveness of European ports, while expanding their broader social role with a focus on safety, security and more efficient digital operations, as well as stronger and more integrated supply chains.
As part of that effort, beaches, hotels and leisure venues are already undergoing preparations and upgrades aimed at improving services and further enhancing the visitor experience.
Meanwhile, the municipality said it is continuing with projects and interventions designed to improve infrastructure, upgrade public spaces and make beaches, recreation areas and tourist zones more accessible to both residents and visitors.
In that context, the municipality said Paralimni-Deryneia continues to occupy a leading position in Cyprus tourism, with 18 Blue Flag beaches, more than any other municipality on the island.
It also pointed to the international recognition of Fig Tree Bay in Protaras, noting that it is the only beach in Cyprus included among the 19 best beaches in Europe.
According to the data, Cyprus retail trade volume fell by 0.8 per cent month-on-month in January 2026, contrasting with a slight increase across the wider European market.
Across the bloc, seasonally adjusted retail trade volume decreased by 0.1 per cent in the euro area while the EU recorded a monthly increase of 0.1 per cent in January 2026 compared with December 2025.
The figures followed a 0.2 per cent increase in euro area retail trade volume in December 2025, while retail activity across the EU remained stable during the same month.
In Cyprus, the monthly decline in January followed a 0.1 per cent increase in December 2025 and a stronger 0.9 per cent rise in November 2025, indicating that the sector had previously shown positive momentum before the latest drop.
The new rules aim to drastically reduce administrative burdens and strengthen the outward-looking nature of small businesses within the single market.
Under the previous system, a small business could only receive a VAT exemption in the member state where it was established.
With the new regime, eligible small and medium-sized enterprises (SMEs) can now benefit from VAT exemptions in other EU member states where they make sales, even if they do not maintain a permanent establishment there.
To join the new scheme, a business must cumulatively meet specific eligibility criteria related to its financial performance.
The total annual turnover within the European Union must not exceed 100,000 euros for the enterprise to qualify for the cross-border benefits.
The index, which uses 2021 as a base year of 100, reached 139.8 units for the month, highlighting a resilient end to the year for the island’s industrial base.
For the full year of 2025, the index recorded a total increase of 5 per cent when compared with the entirety of 2024.
Manufacturing proved to be the primary engine of this growth, with its specific index reaching 146.8 units in December 2025.
This figure represented a sharp annual increase of 7.1 per cent for the manufacturing sector compared with December of the previous year.
A positive performance was also recorded in the mining and quarrying sector, which saw a turnover increase of 6 per cent.