Nicosia, Cyprus. Cyprus’ current account deficit widened and its international investment position deteriorated in the first quarter of 2026, according to preliminary external sector data released on Tuesday by the Central Bank of Cyprus. The data also showed that external debt increased by approximately €1.5 billion.
Current account deficit widens
The current account deficit expanded to €1.27 billion in the first quarter of 2026, from €1.01 billion in the corresponding period of 2025, a deterioration of €263 million.
When adjusted to treat special purpose entities as non-residents, the current account deficit stood at €1.37 billion, compared with €1.12 billion in the first quarter of 2025.
Drivers of the deterioration
The Central Bank of Cyprus said the deterioration was mainly driven by a larger secondary income deficit and lower net exports of services, particularly in financial services and telecommunications, computer and information services.
These developments were partly offset by an improvement in the goods balance and a smaller deficit in primary income, the central bank said.
Financial inflows and investment position
Despite the weaker current account position, Cyprus recorded net financial inflows of €1.14 billion during the first quarter, exceeding the level seen a year earlier.
According to the Central Bank of Cyprus, the increase reflected a smaller net outflow position in portfolio investment and stronger net inflows under other investment.
Cyprus’ international investment position also weakened during the quarter. The country’s net liability position widened to €28.31 billion at the end of the first quarter, from €28.17 billion at the end of the fourth quarter of 2025.
After adjusting for the impact of special purpose entities, the net liability position increased to €10.03 billion from €8.93 billion in the previous quarter.
