Cyprus’ long-term issuer default ratings have been raised to A from A- by Fitch Ratings, which assigned the country a stable outlook. The agency cited falling government debt and strong fiscal balances, while flagging inflation and external vulnerabilities as risks.
By Money Talk·November 7, 2026·2 min read·484 reads
Fitch expects Cyprus to record a general government surplus of 3.2% of GDP in 2026, the highest in the euro zone. Government debt is forecast to decline to 46.3% of GDP in 2026 from 52.4% in 2025, then fall further to 36.6% in 2028.
The agency projects GDP growth of 3% a year from 2026 through 2028, above the euro-zone average, supported by domestic consumption and continued strength in services. Tourism inflows, Fitch said, recovered quickly after slowing at the start of the Middle East conflict.
Inflation remains a challenge, reflecting Cyprus’ heavy reliance on imported fossil fuels and elevated service prices. Harmonized inflation reached 5.2% in September, up from 0.9% in February. Fitch expects it to average 2.5% in each of 2026, 2027 and 2028, compared with 4% this year.
The current account deficit is forecast to average 8.1% of GDP in 2026-28. Fitch identified inflation pressures and their effect on consumption as short-term risks, with external vulnerabilities posing a key medium-term challenge.
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