Rating agency DBRS this week released a report projecting robust GDP growth for Cyprus over the coming years.

The agency explained that its projections are based on a positive trend in unemployment and Cyprus’ strong fiscal performance in recent years, despite challenges in the country’s service-based economy.

According to DBRS, Cyprus is set to sustain strong economic growth driven by improvements in employment and government financial health.

The agency, drawing on data from the Central Bank of Cyprus (CBC), notes a persistent downward trend in non-performing loans (NPLs), which decreased from 43.7 per cent at the end of 2017 to 6.8 per cent in August 2024, marking a significant reduction of €18.9 billion in absolute terms.

Despite these advances, DBRS identifies the economy’s small size and reliance on services as vulnerabilities to external shocks.

The agency also points to the lingering issue of NPLs, which, while improving, still exceed the Eurozone average, and a comparatively low level of labour market productivity.

Further compounding these economic pressures are delays in financial restructuring, exacerbated by foreclosure suspensions, the pandemic, and geopolitical tensions, prompting an extension of the public asset management company Kedipes’ business plan until 2030.

In the real estate sector, DBRS pointed to a continuing rise in property prices, with an 8 per cent increase in the annual growth rate as of the second quarter of 2024, driven primarily by a 12 per cent rise in apartment prices.

According to the agency, much of the collateral backing these financial activities is residential and predominantly located in Nicosia and Limassol, the most stable property markets in Cyprus.