Nicosia, Cyprus. Cyprus’ current account balance improved in 2025, though geopolitical tensions in the Middle East were cited as a significant risk to the country’s external position, according to Eurobank research economist Michail Vassileiadis.
Deficit narrows from 2024 levels
Eurobank’s analysis said Cyprus’ current account deficit narrowed by 1.8 percentage points of GDP compared with 2024, reaching 6.4 per cent of GDP. This followed a 1.5 percentage point correction after the 15-year peak deficit in 2023, when the shortfall was 9.7 per cent of GDP.
Services surplus reaches historic high
The improvement was driven mainly by a further expansion in the services surplus, which rose to a historic high of 25.2 per cent of GDP from 23.5 per cent in 2024. The analysis said the record services surplus reflected broad-based strength across key sectors.
Goods and income balances
A modest narrowing of the goods deficit by 0.4 percentage points of GDP also contributed, though the deficit remained elevated at 19.5 per cent of GDP. By contrast, the primary income deficit widened to 11.2 per cent of GDP from 10.8 per cent, reflecting increased net expatriation of direct investment profits. The secondary income balance remained slightly negative at 0.9 per cent of GDP, improving marginally from negative 1.0 per cent in 2024.
Sector-level services surpluses
According to the analysis, surpluses increased in intellectual property services, tourism and financial services, reaching 5.3 per cent, 5.7 per cent and 6.5 per cent of GDP respectively, compared with 4.4 per cent, 5.2 per cent and 6.1 per cent in 2024.
How do you think geopolitical tensions in the Middle East could affect Cyprus’ external position?