Cyprus current account deficit narrows year-on-year despite late deterioration

Cyprus recorded a current account deficit of €0.8 billion in the fourth quarter of 2025, according to Eurostat, reflecting a deterioration compared with the previous quarter.

Figures released this week showed that the deficit widened from €0.10 billion in the third quarter of 2025, indicating increased external imbalances.

Despite this quarterly decline, Cyprus’ position improved compared with a deficit of €1.40 billion in the fourth quarter of 2024, pointing to some year-on-year recovery.

Over the course of 2025, Cyprus maintained a persistent current account deficit, with figures showing a deficit of €1.00 billion in the first quarter and €0.40 billion in the second quarter, before narrowing temporarily in the third quarter.

The figures highlight the structural challenges facing Cyprus’ external balance, as the country continues to rely on external financing.

At the European level, the EU recorded a current account surplus of €86.70 billion in the fourth quarter of 2025, equivalent to 1.8 per cent of GDP.

This compares with a surplus of €65.40 billion, or 1.4 per cent of GDP, in the third quarter of 2025, showing an improvement over the quarter.

However, the surplus remained below the €98.20 billion recorded in the fourth quarter of 2024, when it stood at 2.1 per cent of GDP.

The quarterly changes were driven by a decrease in the surplus of the goods account, which fell to €89.10 billion from €95.30 billion.

At the same time, the surplus in the services account increased significantly, rising to €44.20 billion from €20.50 billion.

Meanwhile, the deficit in the primary income account narrowed to €18.00 billion, compared with €19.70 billion in the previous quarter.

Similarly, the deficit in the secondary income account decreased to €28.60 billion, from €30.60 billion.

In addition, the capital account deficit widened to €5.90 billion, compared with €0.60 billion in the third quarter.

In terms of global partners, the EU recorded its largest current account surplus with the United Kingdom at €63.30 billion, reflecting strong economic ties.

Significant surpluses were also recorded with Switzerland at €22.90 billion and offshore financial centres at €21.00 billion, alongside Canada at €11.30 billion and Brazil at €11.20 billion.

Further surpluses were observed with Hong Kong at €8.10 billion, Japan at €7.60 billion, Russia at €3.10 billion and India at €0.60 billion.

Conversely, the EU recorded deficits with China at €54.20 billion and the United States at €14.60 billion, underlining trade imbalances with major economies.

On the financial account, the EU recorded an increase in direct investment assets of €85.20 billion, alongside a rise in liabilities of €32.60 billion.

As a result, the EU acted as a net direct investor globally, with net outflows of €52.60 billion.

At the same time, portfolio investment recorded a net inflow of €173.50 billion, while other investment saw a net inflow of €6.10 billion.

Across member states, seventeen countries recorded current account surpluses, nine posted deficits and one remained balanced, reflecting diverse external positions.

The largest surpluses were observed in Germany at €51.30 billion, the Netherlands at €34.50 billion and France at €21.80 billion, followed by Denmark at €15.20 billion and Ireland at €12.80 billion.

Additional surpluses were recorded in Spain at €10.30 billion and Sweden at €7.10 billion, highlighting strong external positions in these economies.

Meanwhile, the largest deficits were recorded in Romania at €8.30 billion, Greece at €7.00 billion, Belgium at €3.90 billion and Bulgaria at €3.80 billion, reflecting ongoing imbalances.