Significant external and internal risks to the economy were highlighted by Finance Minister Makis Keravnos on Monday during the presentation of the 2025 state budget at the House finance committee.

Despite the positive economic outlook, the degree of uncertainty remains high, the minister told MPs.

In spite of the “major challenges” facing the global economy – due to the ongoing war in Ukraine and the expanding conflict in the Middle East – this year would close out with a GDP growth rate of 3.7 per cent.

Under the ministry’s baseline macroeconomic scenario, in 2025 GDP is forecast to grow by 3.1 per cent. Meantime inflation is expected to drop to 2 per cent, and unemployment to 4.8 per cent.

Keravnos stressed the importance of maintaining a surplus in the fiscal balance, with the surplus projected to reach 2.7 per cent of GDP by 2025.

New home sales in Cyprus reached €1.9 billion during the first nine months of 2024, according to a report from Nicosia-based firm Landbank Analytics.

According to the report, this figure represents a 25 per cent increase compared to the same period in 2023.

The report, based on sales contracts submitted to the Department of Lands and Surveys from January to September 2024, revealed that 5,253 new homes—both apartments and houses—were sold nationwide, marking a 19.2 per cent increase compared to the same period last year.

In more detail, apartment sales saw particularly robust growth, with 4,335 new apartments sold, representing a 27.7 per cent increase in volume and a 38.1 per cent rise in value, totalling €1.45 billion.

In contrast, new house sales declined by 9.2 per cent in volume and 2.8 per cent in value, with 918 homes sold for a combined €457.2 million.

Illicit cigarette consumption in Cyprus remains a pressing issue, accounting for 11 per cent of the total market, according to KPMG’s 2023 independent report for Philip Morris International.

While this marks a slight reduction in the rate, the impact on government revenue is still substantial, with contraband cigarettes costing the state an estimated €18 million in tax losses for the year.

The report stresses that 100 million illicit cigarettes were consumed in Cyprus last year, largely due to an influx from areas outside the Republic of Cyprus’ control.

Outflows of illegal cigarettes also rose by 3 per cent, with smaller markets seeing higher volumes. However, the UK remains the largest destination for Cyprus’ illicit cigarette exports, despite a slight reduction in outflows to the country. 

“Eliminating illicit tobacco trade is a long-term priority for Philip Morris International,” said Greg Kamperis, General Manager of Philip Morris Cyprus.

A significant share of Cypriot wealth continues to languish in low-interest bank deposits, despite alternative investment options, according to senior investment specialist at Athlos Capital Phanos Vladimirou.

He also attributed the persistently low interest rates on bank deposits in Cyprus to banks’ excess liquidity, low competition, and a lack of financial literacy among the population,

“Cypriot banks have some of the highest liquidity ratios in Europe,” Vladimirou explained in a recently published analysis piece.

“This means that the volume of deposits in the domestic banking system is quite large compared to the options available for banks to channel this liquidity,” he added.

“As a result”, he continued, “banks do not have a pressing need to attract new deposits, which is why they keep interest rates low, even if it risks losing some of their existing deposits”.

The Central Bank of Cyprus on Monday urged the public to be particularly careful in their transactions, due to the circulation of counterfeit US$100 banknotes.

“The Central Bank of Cyprus announces that it has become aware that counterfeit US$100 banknotes are circulating in the market and urges the public/traders to be particularly careful when transacting,” the supervisory authority said.

Employers have agreed to a labour ministry proposal in the ongoing negotiation for the renewal of collective agreements in the hotel industry, Labour Minister Yiannis Panayiotou said on Monday.

He told CyBC radio that head of the hoteliers association Pasyxe, Filokypros Roussounidis said the decision was taken on Saturday at an extraordinary general meeting of the association.

President of the Association of Cyprus Tourist Enterprises (Stek) Akis Vavlitis said that despite the proposal being to the benefit of the trade union side, his association also accepted it.

“The issue is for the tourism industry to continue calmly to contribute to the country’s economy,” Vavlitis told CyBC.

He expressed hope the unions would respond positively to the labour minister’s proposal, warning that otherwise, the sector would be led into uncharted waters.

The Cyprus Stock Exchange (CSE) ended Monday, October 21 with losses.

The general Cyprus Stock Market Index was at 194.85 points at 12:42 during the day, reflecting a decrease of 0.75 per cent over the previous day of trading.

The FTSE / CySE 20 Index was at 118.72 points, representing a drop of 0.78 per cent.

The total value of transactions came up to €92,350, until the aforementioned time during trading.

In terms of the sub-indexes, the main, investment firm and hotel indexes fell by 1.29 per cent, 3.98 per cent and 1.09 per cent respectively. The alternative index rose by 0.81 per cent.

The biggest investment interest was attracted by the Bank of Cyprus (no change), Hellenic Bank (-0.26 per cent), the Cyprus Cement Company (+1.3 per cent), Logicom (no change), and Demetra (-4.02 per cent).