Morningstar DBRS upgrades Cyprus outlook to positive

On September 4, 2026, the international rating agency Morningstar DBRS upgraded the credit outlook of the Republic of Cyprus from stable to positive, while confirming the long-term credit rating at the 'A' level. The agency also upgraded the short-term rating to R-1 (low) with a positive trend. This decision is driven by the country's robust fiscal position, significant structural budget surpluses, and a sustained downward trajectory for public debt, which is projected to fall below 40% of GDP by 2029 from an expected 49.9% in 2026.

The agency forecasts that the Cypriot economy will maintain an annual growth rate of approximately 3% over the coming years, supported by strong private consumption, increased investment, and exports in the services sector. Although the war in the Middle East has caused some inflationary pressure and a reduction in tourism, the overall impact on the economy has been milder than initially anticipated. President Nikos Christodoulides and Finance Minister Makis Keravnos welcomed the development as proof of the resilience and reliability of the government's economic policies, noting that these reforms aim to foster competitiveness and increase household income.

Despite the positive outlook, the report notes certain constraints, including the relatively small size of the economy, low labor productivity, and vulnerability to external shocks. The current account deficit (excluding Special Purpose Entities) reached 7.3% of GDP in 2025, which the agency continues to monitor as part of the country's broader economic risk profile.