Source: cyprus-mail.com
Business & economy wrap-up from the day before
In a statement following the ECB’s monetary policy decision on Thursday, October 29, Patsalides said the euro area faced a more prolonged period of elevated inflation, while Cyprus’ economic resilience, sound public finances and strong banking sector were helping the country withstand the effects of rising prices.
“The prolongation of the energy shock, the deterioration in the inflation outlook and the ECB’s commitment” were the defining features of the current situation, he said.
The ECB’s Governing Council decided to leave its three key interest rates unchanged, with the deposit facility rate at 2.50 per cent, the main refinancing rate at 2.65 per cent and the marginal lending facility rate at 2.90 per cent.
The Greek banking group’s reported net profit rose by 12.4 per cent to €1.16bn, while earnings per share reached €0.31 and its return on tangible book value stood at 16.9 per cent.
Its non-Greek operations generated adjusted net profits of €555 million, accounting for 45.9 per cent of the group’s total, with Cyprus contributing €356 million and Bulgaria €182 million.
However, adjusted net profit in Cyprus fell by 3.9 per cent year-on-year, while the Bulgarian operation recorded an increase of 9.2 per cent.
Eurobank chief executive officer Fokion Karavias said the results had been achieved against an international backdrop of energy and inflationary pressures, alongside growing concerns over government deficits and debt.
“As Europe faces a severe energy and inflationary crisis with far-reaching political and social consequences, markets have brought concerns over fiscal deficits and rising public debt into focus,” he stated.
The latest projections point to economic growth moderating from 4.8 per cent in 2025 to 3.2 per cent in 2026 and 3.1 per cent in 2027, with rising prices and tighter monetary conditions expected to weigh on activity over the coming quarters.
The revised 2026 forecast is 0.5 percentage points higher than CypERC’s July estimate, while the projection for 2027 remains unchanged.
The upward revision reflects stronger-than-expected growth during the second quarter of 2026, alongside favourable developments in the third quarter, including improved economic confidence, low unemployment and continued growth in new housing loans.
However, the research centre warned that the outlook remained vulnerable to geopolitical developments, with the Middle East conflict intensifying inflationary pressures and increasing the risk that economic growth could fall short of expectations.
Inflation is expected to accelerate sharply, rising from 0.1 per cent in 2025 to 3.1 per cent in 2026, before easing to 2.3 per cent in 2027.
Keravnos said Lagarde had led the ECB through a period of significant economic challenges, helping safeguard monetary stability and strengthen the resilience of the euro area.
“I thank her for her valuable contribution to Europe and Cyprus and wish her every success in her future endeavours,” Keravnos said.
The number of unemployed people in Cyprus stood at approximately 21,000 in September, down from around 22,000 in September 2025, as the labour market continued to perform better than the European Union average.
The figures also showed that youth unemployment in Cyprus declined over the past year, with the number of unemployed people aged under 25 falling from approximately 4,000 in September 2025 to 3,000 in June 2026, where it remained through September.
Across the EU, however, unemployment increased over the year, with the overall rate reaching 6.2 per cent in September, compared with 6 per cent in the same month of 2025.
Speaking to the Cyprus Mail for the latest issue of Cyprus 4.0, Elias Neocleous, managing partner of Elias Neocleous & Co. LLC, explained that the development of NeoLaw.ai reflects a longer-term effort to integrate technology into legal practice rather than a response to the recent AI boom.
Developed as an internal legal support environment, NeoLaw.ai is intended to assist lawyers with research, complex documentation, case preparation, preliminary risk analysis and routine administrative work.
Neocleous argued that the value of AI lies not in replacing legal expertise, but in freeing lawyers to concentrate on areas where human judgement, creativity and professional responsibility remain essential.
The discussion also examined the safeguards required when AI is used in a profession where accuracy and confidentiality are fundamental, as well as the potential for Cyprus to develop into a regional hub for technology-enabled professional services.
The figures show that household indebtedness has fallen by 65 per cent since December 2016, while the debt-to-GDP ratio of non-financial companies has declined by 95 per cent over the same period, pointing to a substantial reduction in borrowing across both sectors.
Despite the improvements, corporate debt remained considerably higher than household debt, with non-financial companies carrying liabilities equivalent to more than the value of the country’s annual economic output.
The CBC reported that household financial assets totalled €67.1 billion at the end of June 2026, considerably exceeding their outstanding debt.
The figures, published in ‘Wealthyhood’s Cyprus Investor Pulse 2026‘ report, cover anonymised and aggregated data from clients resident in Cyprus between June 1 and September 30, with the findings highlighting how lower entry costs and simpler account funding can encourage participation in financial markets.
Alexandros Christodoulakis, co-founder and chief executive of Wealthyhood, told the Cyprus Mail that the response from Cypriot investors had exceeded expectations in terms of the quality of their engagement.
“People in Cyprus didn’t need to be convinced that investing matters. What they were missing was a simple, trusted way to start, and once that existed, they moved quickly,” he said.
The report found that 88.6 per cent of clients who deposited money went on to buy a stock or exchange-traded fund (ETF), compared with 80.4 per cent among clients who signed up in Greece during the same period.
The latest figures show that prices, including all taxes and levies, have declined steadily since reaching €0.37 per kilowatt-hour in the first half of 2023, although households are still paying considerably more than they did before the energy crisis.
When adjusted for differences in purchasing power, Cyprus recorded 29.9 purchasing power standard (PPS) units per 100 kilowatt-hours in the first half of 2026, providing an indication of the relative burden of electricity costs on households.
Across the European Union, average household electricity prices fell by 2.2 per cent in the first half of 2026, declining to €0.28 per kilowatt-hour from €0.29 in the second half of 2025.
Despite the decrease, prices remained well above levels recorded before the 2022 energy crisis, indicating that households continued to face higher electricity costs than before the energy market turmoil.
The international division, which includes the bank’s business in Cyprus, generated a reported profit of €57 million, down 16 per cent year-on-year, while net interest income rose by 64 per cent and fee services income increased by 65 per cent over the same period.
Net loans across the international operations stood at €2.9 billion, while customer deposits reached €6.6 billion, with the division recording a return on tangible book value of 12.9 per cent during the nine-month period.
The group also recorded €0.7 million in integration costs in Cyprus, contributing to total operating expenses of €231.7 million for the group in the third quarter.
The Cyprus-related provisions and integration costs formed part of a wider period of restructuring and integration, as Alpha Bank continues to pursue its transformation and prepares to present its strategic priorities through to 2030 at an Investor Day scheduled for November 5.
The increase came as the Producer Price Index for Industry reached 130.5 points in September, using 2021 as the base year, marking a 2.3 per cent rise compared with August.
For the first nine months of 2026, industrial producer prices increased by 2.1 per cent compared with the corresponding period of 2025, indicating that price pressures across the industrial sector continued to build.
The strongest annual increase was recorded in electricity supply, where producer prices rose by 21.1 per cent compared with September 2025.
Water supply and materials recovery followed with an increase of 10.3 per cent, while manufacturing prices rose by 2.4 per cent and prices in mining and quarrying increased by 0.8 per cent.
The figures show that Cyprus remained below the EU average, where the overall tax-to-GDP ratio climbed to 40.7 per cent in 2025 from 40.2 per cent in 2024.
Across the euro area, the ratio increased more sharply, reaching 41.3 per cent, compared with 40.7 per cent in the previous year.
The tax-to-GDP ratio measures the combined revenue governments collect from taxes and net social contributions as a share of gross domestic product (GDP), providing an indication of the relative size of tax revenues in an economy.
In absolute terms, EU revenue from taxes and social contributions increased by €401 billion in 2025 to reach €7.68 trillion, compared with the previous year, Eurostat reported.
Revenue stood at €581.8m in August 2025, meaning the sector earned €19.8m less than a year earlier, as tourist arrivals declined from 602,026 to 581,880.
The latest figures also show that tourism revenue for the first eight months of 2026 reached €2.32 billion, down 6.2 per cent from €2.47bn during the corresponding period of 2025.
The August decline follows a stronger performance in July, when tourism revenue increased by 4.6 per cent to €536.5m, supported by higher visitor spending despite slightly lower arrivals.
In August, however, average expenditure per tourist remained almost unchanged at €965.81, compared with €966.41 a year earlier.
The decision was confirmed at a recent meeting of the CSE Council under Article 184 of the Cyprus Stock Exchange Law, following the initial announcement on October 15, 2026.
The suspension will remain in place for a further two months, unless the company addresses the issues that led to the trading halt.
The rate is determined under Article 314A of the Cyprus Criminal Code, Cap. 154, which makes it a criminal offence for lenders to demand or receive financial or other benefits exceeding the prescribed reference rate.
The provision applies when a loan is granted, its repayment period is extended, or an existing loan is renewed or discounted.
It covers benefits received, collected, charged, stipulated or obtained either for the lender’s own benefit or on behalf of a third party.
Anyone convicted of breaching the provision faces up to five years in prison, a fine of up to €30,000, or both penalties.
The event, held at the Paris Nord Villepinte exhibition centre, is considered one of the leading international trade fairs for the food and beverage industry and is organised every two years by Comexposium.
According to an announcement by the Ministry of Energy, Commerce and Industry, this year’s exhibition brought together 8,000 exhibitors from 130 countries and approximately 295,000 professional visitors, offering opportunities to explore emerging industry trends, discover innovations and develop commercial partnerships.
A major focus of Cyprus’ presence was halloumi, with 13 companies taking part in the dairy products pavilion in Hall 7.
The exchange announced on Friday that the suspensions would remain in force under Article 185 of the Securities and Cyprus Stock Exchange Law, as the reasons behind the original decisions had not been resolved.
Rianeson Investments has failed to submit and publish four outstanding financial reports, covering both annual and half-yearly periods.
These include its annual financial report for the year ended December 31, 2024, its half-yearly report for the six months to June 30, 2025, its annual report for the year ended December 31, 2025, and its half-yearly report for the six months to June 30, 2026.
G.A.P. Vassilopoulos, meanwhile, remains suspended because it has not submitted and published its half-yearly financial report for the period ended June 30, 2026.
With the February 28, 2027 deadline approaching, MPs from Disy, Diko and Elam have put forward a proposal to extend the transitional arrangements for hotels and tourist accommodation establishments that have still not secured their full operating licences.
The concern, as mentioned by Politis this week, is that a substantial number of businesses will not obtain the necessary fire protection certificates in time, potentially forcing them to stop trading.
The MPs behind the proposal have warned that widespread closures could have serious consequences for the economy, putting thousands of jobs at risk and affecting businesses that depend on tourism.
Their proposed amendment would move the fire safety deadline to February 28, 2029, giving operators another two years to secure the required documentation and resolve outstanding problems with their properties.
It would also allow qualifying businesses to continue operating until December 31, 2030, provided they comply with the relevant conditions while working towards obtaining full licences from the Deputy Ministry of Tourism.
The revised figures, included in the authority’s 2027 budget, which has been submitted to parliament, show revenue rising by €1.07m, or 1.5 per cent, compared with the €71.85m expected in 2026.
The increase is being driven mainly by the agreement with OPAP Cyprus and expectations of further growth in betting activity, following the increases recorded in recent years.
The latest forecast, though, represents a downward revision from the €75.27m previously projected for 2027, according to the earlier budget figures presented to parliament in January.
The difference is worth noting, particularly as the betting industry continues to generate substantial revenue for operators and the state.
Under the proposed budget, expenditure will reach €72.71m, an increase of €1.18m, or 1.65 per cent, from 2026, leaving the authority with a relatively modest surplus of €210,000.
The event, announced by the Cyprus Chamber of Commerce and Industry (Keve), which coordinates EEN activities in Cyprus, will explain the main funding instruments available under the programme and outline the most important changes and new developments planned for 2027.
The session is aimed at businesses and organisations seeking European funding to support innovation, develop new technologies and scale up their operations.
Participants will receive information on the EIC Pathfinder, EIC Transition and EIC Accelerator programmes, as well as the Strategic Technologies for Europe Platform (STEP) Scale Up initiative.
Nicolaou explained that, for many businesses, tax compliance has traditionally developed around individual obligations. Corporate income tax, VAT, transfer pricing, Pillar Two and other reporting requirements may involve different teams, different processes, different technologies and, often, repeated requests for overlapping data.
“That model is becoming increasingly difficult to sustain,” he said, referring to the growing pressure businesses face to manage costs, address resource constraints and obtain better insight from their data as regulatory requirements expand and tax authorities increase their scrutiny.
He also identified fragmented and low-quality data, increasing regulatory demands, rising audit activity, limited visibility and cost pressures among the challenges facing clients today.
The Industrial Production Index reached 90.9 points in August, using 2021 as the base year with a value of 100, marking a decrease compared with August 2025.
Despite the monthly annual decline, industrial production increased by 1.2 per cent during the first eight months of 2026 compared with the corresponding period of the previous year.
The manufacturing sector recorded a 2.5 per cent annual decrease in August. By contrast, mining and quarrying production rose by 11 per cent, while water supply and materials recovery increased by 5.7 per cent. Electricity supply recorded a marginal increase of 0.1 per cent over the same period.