Fitch affirms Cyprus rating: economy remains resilient amid global risks

International rating agency Fitch Ratings has affirmed Cyprus's long-term foreign-currency issuer default rating at 'A-' with a positive outlook. The agency noted that the country's economy demonstrates resilience thanks to strong fiscal performance, stable policies, and support from EU and eurozone membership. At the same time, experts pointed to ongoing risks related to geopolitical instability in the region and Cyprus's high dependence on external factors.

According to Fitch's assessment, the positive outlook is linked to the continued reduction of public debt and robust economic growth prospects. The country's public debt decreased by nearly 60 percentage points of GDP from 2020 to 2025, and by the end of 2027, it could drop to 45% of GDP — significantly below the average for countries with a similar rating.

Following economic growth of 3.8% in 2025, Fitch expects a moderate slowdown to 2.6% in 2026–2027. The main drivers of growth will remain investments supported by the EU Recovery and Resilience Plan, as well as private projects. Meanwhile, inflation is projected by the agency to rise to 3.9% in 2026 due to high energy prices and the country's dependence on fuel imports.

The report pays special attention to Cyprus's vulnerability to external shocks, including conflicts in the Middle East. Fitch warns that further escalation could negatively impact tourism, trade, and investment. However, the agency notes that the country's economy has become more diversified: over the last decade, the IT sector and other high-value-added services have grown significantly.

Cyprus's banking sector also received a positive evaluation. Fitch emphasized that the country's banks possess high liquidity and capitalization, while the share of non-performing loans has decreased to 1.6% compared to nearly 45% ten years ago.

President of Cyprus Nikos Christodoulides and Finance Minister Makis Keravnos welcomed the agency's decision, calling it a confirmation of confidence in the country's economic policy and an important signal for investors.