Morningstar DBRS proceeded to upgrade the long -term credit rating of the Cyprus economy on Friday night, maintaining its prospects.

Upgrading and positive prospects reflect, as the house notes, the sharp decline in public debt burden In recent years and DBRS’s expectation that public debt indicators will continue to improve substantially in the coming years.

According to DBRS, the ratio of general government debt to GDP decreased from 96.5% in December 2021 to 69.7% in September 2024due to the large budgetary surpluses and high rates of rising GDP.

At the same time, it notes that in the future, the European Commission (EC) provides that the general government’s debt will be reduced to 56.7% of GDP in 2026, as economic and fiscal developments are expected to remain favorable.

Economic growth, according to the house, is likely to continue to benefit from strong private consumption, increasing exports of services and strong construction investments in the coming years.

While, like other European Union (EU) countries, prospects are exposed to downward risks, such as the escalation of geopolitical and global commercial tensions, the Cypriot economy is less vulnerable to the immediate impact of the rising US duties In the imports of EU goods from most other EU countries, given the relatively small size of its manufacturing sector, according to the Canadian house.

Evaluation A (Low), as DBRS points out, is supported by the stable political environment, the healthy fiscal and economic policies pursued by the government in recent years and by the moderate burden on interest.

In addition, although the governance indicators have been weakened in recent years, Morningstar DBRS continues to consider the country’s EU accession as an important basis for the quality of institutions.

On the other hand, he notes that Cyprus’s credit ratings are still limited by the small size of its services based on services, which makes it vulnerable to external vibrations, the relatively low level of labor productivity of the economy and the large current transaction deficit.