Eurobank research warns of widening current account deficit in Cyprus

Eurobank Research has issued a warning regarding the widening current account deficit of the Cypriot economy, noting that the imbalance in external transactions requires urgent attention despite continued economic growth. According to revised data from the Central Bank of Cyprus (CBC), the deficit for 2025 reached 8.8% of GDP, up from an earlier estimate of 6.4%, effectively reversing a previously recorded improvement.

The 2025 deficit grew by €870 million to reach a total of €3.21 billion. The primary drivers of this adjustment included a €1.42 billion increase in the estimated primary income deficit, particularly regarding net investment income, alongside upward revisions in the goods deficit and net current transfers. These negative trends were partially offset by a €855 million increase in the service sector surplus, driven largely by telecommunications, information, and computer services.

While the 2024 deficit was downwardly revised to 5.5% of GDP from 8.2%, data from the first half of 2026 suggests further deterioration. Eurobank emphasizes the need to strengthen and diversify Cyprus's sources of external revenue to mitigate risks as the current account imbalances continue to expand.