The November 2025 BoT deficit of -€710.60 million marks a significant deterioration compared to October’s -€566.90 million and the 12-month average of approximately -€650 million. This widening gap reflects persistent import growth outpacing exports amid ongoing global supply chain disruptions and elevated energy prices. Cyprus’s trade balance remains structurally negative, driven by its reliance on imports for energy and capital goods.

Drivers this month

• Energy imports surged by 12% MoM, exacerbating the deficit.
• Exports contracted 3% MoM due to weaker demand from key European partners.
• Tourism-related goods exports showed marginal improvement but insufficient to offset deficits.

Policy pulse

The BoT deficit exceeds the government’s fiscal planning assumptions, pressuring Cyprus’s external financing needs. The Central Bank of Cyprus remains cautious, maintaining its key interest rate at 3.75%, balancing inflation control with growth concerns. The government’s recent fiscal stimulus, focused on infrastructure, may further widen the deficit short term.

Market lens

Following the release, the EUR/CYP currency pair depreciated 0.15% within the first hour, reflecting concerns over external imbalances. Sovereign bond yields edged up by 5 basis points, signaling increased risk premium. Equity markets showed muted reaction, with the Cypriot stock index down 0.30%.

Cyprus’s BoT deficit has averaged -€650 million over the past year, with notable volatility linked to energy price swings and seasonal tourism flows. The November figure of -€710.60 million is the largest monthly deficit since June 2025 (-€765.90 million), underscoring persistent external vulnerabilities.

Monetary Policy & Financial Conditions

The Central Bank’s steady policy stance aims to contain inflation, currently at 4.20% YoY, while supporting growth. Financial conditions remain moderately tight, with 2-year government bond yields at 3.80%, up from 3.50% three months ago. Credit growth to the private sector slowed to 2.10% YoY, reflecting cautious lending amid external uncertainties.

Fiscal Policy & Government Budget

Fiscal deficits have widened slightly due to increased public investment and social spending. The government projects a 2025 budget deficit of 3.20% of GDP, up from 2.80% in 2024. This expansionary stance aims to stimulate domestic demand but risks exacerbating external imbalances if imports rise faster than exports.

External Shocks & Geopolitical Risks

Heightened geopolitical tensions in Eastern Mediterranean energy markets have increased import costs. Additionally, supply chain disruptions in Europe have constrained export volumes. These shocks amplify Cyprus’s trade deficit and complicate policy responses.

Drivers this month

• Energy imports: +12% MoM, largest monthly increase since June 2025.
• Export volumes: -3% MoM, reversing a two-month upward trend.
• Tourism-related exports: 1.50% MoM, modest recovery but insufficient.

Policy pulse

The Central Bank’s neutral stance faces pressure as the widening deficit may fuel inflationary pressures through currency depreciation. Fiscal stimulus, while growth-supportive, risks further external imbalances if not paired with export competitiveness measures.

Market lens

Immediate reaction: EUR/CYP dipped 0.15%, reflecting concerns over external deficits. Sovereign bond yields rose 5 basis points, indicating increased risk perception. Equity markets declined 0.30%, signaling investor caution.

Looking ahead, Cyprus’s BoT trajectory depends on energy price trends, export recovery, and policy responses. We outline three scenarios:

Bullish scenario (25% probability)

• Energy prices stabilize or decline, reducing import costs.
• Exports rebound 5% YoY, driven by tourism and manufacturing recovery.
• Fiscal consolidation limits import-driven demand growth.
• Result: BoT deficit narrows to -€500 million by Q1 2026.

Base scenario (50% probability)

• Energy prices remain elevated but stable.
• Exports grow modestly (1-2% YoY), offset by rising imports.
• Fiscal policy remains expansionary but controlled.
• Result: BoT deficit hovers around -€700 million in near term.

Bearish scenario (25% probability)

• Energy prices spike due to geopolitical shocks.
• Exports contract further amid European slowdown.
• Fiscal stimulus intensifies, boosting import demand.
• Result: BoT deficit widens beyond -€800 million, pressuring currency and credit markets.

Structural & Long-Run Trends

Cyprus’s persistent trade deficits reflect structural factors: energy import dependence, limited export diversification, and small domestic market size. Long-run competitiveness hinges on expanding high-value exports and improving energy efficiency. Policy reforms targeting innovation and trade facilitation are critical to reversing chronic deficits.

The November 2025 BoT data underscores Cyprus’s ongoing external challenges. The widening deficit, driven by energy import surges and export softness, pressures monetary and fiscal policy frameworks. While short-term volatility is expected, structural reforms and external environment improvements are essential for sustainable external balance. Investors and policymakers should monitor energy markets, geopolitical developments, and export sector dynamics closely.

Key Markets Likely to React to Balance of Trade

Cyprus’s Balance of Trade figures significantly influence currency, bond, and equity markets. Key tradable assets historically correlated with BoT shifts include the EUR/CYP currency pair, Cypriot sovereign bonds, and select export-oriented stocks. Monitoring these markets provides insight into investor sentiment and external financing conditions.

• EURCYP – Directly reflects Cyprus’s external balance and currency stability.
• CYPR – Leading Cypriot export-oriented equity sensitive to trade flows.
• EUR – Eurozone currency influencing Cyprus’s trade competitiveness.
• BTCUSD – Proxy for global risk sentiment impacting capital flows.
• USDEUR – Inverse of EUR, relevant for external trade competitiveness.

FAQs

What does the latest Cyprus Balance of Trade data indicate?

The November 2025 data shows a widening deficit of -€710.60 million, signaling increased external imbalances and import pressures.

How does the Balance of Trade affect Cyprus’s economy?

Persistent trade deficits can pressure the currency, increase external debt, and constrain economic growth if not offset by capital inflows or policy adjustments.

What are the key risks for Cyprus’s Balance of Trade outlook?

Risks include volatile energy prices, geopolitical tensions, and weaker European demand, which could widen the deficit further.

Takeaway: Cyprus’s November 2025 Balance of Trade deficit signals persistent external vulnerabilities, demanding calibrated policy responses and structural reforms to ensure long-term stability.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 11/13/25