Cyprus is emerging as the East Med’s tiger economy – a fast-growing, resilient, and opportunity-rich market that consistently outperforms its peers. Leveraging its strategic location, highly skilled workforce and proven capacity to rebound from global shocks, the island is now accelerating diversification into high-growth sectors such as communications, digital services and innovation, while continuing to deliver record results in tourism. For investors, Cyprus offers not only stability but a clear trajectory of sustainable, technology-driven expansion.
Cyprus has proven over the decades that it is a robust economy with the qualities to outperform its eurozone peers and withstand external shocks by pivoting rapidly into new markets – traits that increasingly draw comparisons to a ‘tiger-style’ growth model. In recent years, Cyprus has demonstrated its resilience by rebounding from the fallout of the global financial crisis in 2008, the related domestic financial crisis of 2013, the Covid-19 pandemic in 2020, the Russian sanctions that began to tighten in 2022, and uncertainty in 2025 relating to tariffs.
In the first three quarters of 2025 GDP expanded in real terms by 3.5% – far higher than the eurozone average of 1.5% in the same period – with record tourism arrivals and strong growth from the fast-growing information and communications (ICT) sector. The economy is also consistently found to be larger than expected. The most recent revision under Eurostat methodology put economic size (GDP at current prices) at €34.77 billion, some €1.2 billion higher than the previous published figure of €33.57 billion.
Higher GDP levels have helped push down debt ratios even further and the public debt-to-GDP ratio is expected to drop comfortably below 60% of GDP by the end of 2025. With the banks slashing non-performing loans (NPLs) by more than 95% and the government repaying its IMF loan five years early in 2020, Cyprus regained investment grade in 2018.
Looking to the future, implementing the EU’s green and digital transition agenda is giving renewed impetus to digitisation, liberalisation, and green investments. This fresh focus is set to raise the economy’s competitiveness further and leverage the eurozone economy’s highly educated population.
Key Sectors
The Cyprus economy is dominated by services, which accounted for 86.2% of gross value added in 2024, while industry accounted for 6.9%, construction 5.5% and agriculture, forestry and fishing 1.3%. Over the past two decades the economy has diversified. While tourism remains one of the most significant sectors – especially because of its wider impact on retail, transport, construction and especially employment – its value-added contribution, when narrowly defined as accommodation and food services, is smaller today than communications, wholesale and retail trade, real estate, financial services, public administration and professional services. The information and communications sector is now the largest sector, having risen on average by an astonishing 17.7% per year in 2015-24, with big US companies including multinationals based in Ireland being the key markets.
Diversification has been made possible by the longstanding importance of Cyprus as an international business centre, which supported the creation of the rapidly expanding innovation hub. Cyprus was the fastest-growing start-up system in the EU in 2025, according to the StartupBlink Global Startup Ecosystem Index, with a 71% annual increase in start-ups to 305, and is ranked second worldwide among countries with a population of under 2 million. Cyprus is also home to seven of the EU’s 38 evolving Centres of Excellence, as the country takes advantage of its geostrategic location at the intersection of three continents.
Challenges and Opportunities
The key opportunity in the short term is to continue to leverage the inflow of highly skilled people who have recently been drawn to Cyprus as a stable place to do business and which also has attractive visa and income tax regimes. With the support of the Deputy Ministry of Research, Innovation and Digital Policy established in March 2020, the government has launched a raft of initiatives to support competitiveness and the green transition, including renewables storage, photovoltaics and e-mobility. There are also incentives for film production and the island’s budding wine sector, while upgrading the island’s tourism offering continues.
Investment opportunities from start-ups and research centres are expanding, while prospects for headquartering have been boosted by the country’s reputation as a safe eurozone location in which to do business. The main challenge for the future is to harness the combined opportunities of renewable energy, offshore natural gas, and the competitive electricity market launched in 2025 with global energy links via the forthcoming Great Sea Interconnector and its potential link to the geostrategic India-Middle East-Europe Economic Corridor (IMEC) corridor.
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November 2025
