DBRS Morningstar has confirmed the Republic of Cyprus at “A” with a stable outlook, citing the strong performance of the Cypriot economy over the past year despite rising uncertainty linked to the conflict in the Middle East.
The rating agency said Cyprus’s real GDP grew by 3.8% in 2025, supported by strong domestic demand and higher exports of services. It also said the stable outlook reflected balanced risks to the rating.
DBRS said the main source of uncertainty for the Cypriot economy was the recent escalation of hostilities in the Middle East. It said Cyprus’s geographic proximity to the region was increasing uncertainty over the short-term economic outlook, with tourism singled out as a key area of concern. The agency also warned that persistently high global energy prices could squeeze household purchasing power and weigh on private consumption, with the scale of any impact depending on the duration and intensity of the conflict.
At the same time, the agency said Cyprus had strong fiscal buffers that would help it absorb possible negative spillovers from developments in the region. It said the general government posted repeated surpluses in recent years, averaging 2.8% of GDP over 2022-2025, while public debt fell below 60% of GDP in 2025.
DBRS also pointed to the government’s strong fiscal performance, the sound condition of the banking sector and a stable domestic political environment as factors supporting the rating. It said Cyprus’s small economy and reliance on services made it more exposed to external shocks, while low labour productivity and a large current account deficit remained weaknesses.
Nikos Christodoulides and Makis Keravnos express satisfaction
In a post on X, President Nikos Christodoulides expressed satisfaction that “the confirmation of the Republic of Cyprus’ rating at A with a stable outlook by DBRS Morningstar constitutes yet another strong vote of confidence in our country’s economy, especially at the present juncture, with the multi-layered challenges in our region.”
He added that “in an international environment of uncertainty, Cyprus is reaffirming its resilience and credibility, maintaining its fiscal stability and steady growth path.”
Finance Minister Makis Keravnos expressed his strong satisfaction with the confirmation of the Republic of Cyprus’s creditworthiness at investment grade “A” and the maintenance of its outlook at “stable” by DBRS Morningstar.
He said he considered it particularly encouraging that, at a time of instability for the global economy due to the intensification of hostilities in the Middle East, which has also increased uncertainty over Cyprus’ short-term economic prospects because of its geographical position, international rating agencies such as DBRS Morningstar continue, taking into account the latest developments, to express full confidence in the credibility of the Cypriot economy, based on the dynamic growth it has recorded in recent years.
Keravnos also noted that particular importance should be attached to the fact that the agency bases its very positive conclusions on the assessment that the Republic of Cyprus has substantial fiscal buffers, which will allow it to address possible negative consequences from the conflict in the wider Middle East region. He said this finding confirms the confidence international agencies show in the prudent and proactive economic policy followed by the government.
At the same time, he assured that, in view of the challenges Cyprus is called on to face because of developments in the international economic and political environment, the government will continue to support the economy responsibly and flexibly. As he said, this effort will concern growth and employment as well as public finances, through the promotion of appropriate economic plans that will allow the maximum possible use of all available opportunities, to ensure the economy’s continued growth while reducing public debt and successfully addressing the challenges created by the serious destabilising developments in the wider geographical region of Cyprus.