Analysis by Michail Vassileiadis, Research Economist, Eurobank Group.
Against a backdrop of escalating global trade uncertainty following the announcement of reciprocal tariffs in early April, Cyprus’s merchandise trade performance in 2025 presents a mixed picture. While export growth has slowed sharply compared to last year, overall resilience is supported by sector-specific dynamics, particularly in petroleum products. At the same time, idiosyncratic factors on both the export and import side have led to a notable deterioration in the merchandise trade balance.
Global trade tensions and Cyprus’s export performance
The announcement of reciprocal tariffs on April 2, along with subsequent reactions from affected countries, marks the most significant global economic development of the year. Within this environment, assessing Cyprus’s export performance is particularly important.
During the January–August period, the value of Cyprus’s goods exports increased by 2.8% year on year, a sharp slowdown compared to the strong 26.0% growth recorded in the same period of 2024. Nevertheless, this year’s performance slightly exceeds the EU average export growth of 2.0%, following a contraction of 1.5% at EU level last year. Despite the deceleration, Cyprus’s exports therefore appear relatively resilient over the first eight months of 2025.
Exports to the US: limited exposure, sharp decline
Exports to the United States remain a small component of Cyprus’s total goods exports, accounting for 2.2% on average over the 2015–2024 period. In January–August 2025, however, exports to the US fell sharply by 37% year on year, following a similarly steep decline of 33.7% in the same period of 2024.
This contraction is largely attributed to reduced exports of ships and aircraft and cannot be directly linked to tariff-related disruptions. As a result, the US now represents just 1.4% of Cyprus’s total merchandise exports. The country’s historically low dependence on US demand, combined with an upward trend in overall merchandise trade, significantly mitigates the impact of the declining US share.
Petroleum products drive headline export growth
Looking at the broader export picture in 2025, the modest 2.8% increase in goods exports is almost entirely driven by a dramatic surge in petroleum product exports, which rose by 281.9% year on year. This surge has substantially altered the composition of Cyprus’s merchandise exports, with petroleum products increasing their share from 16.3% in 2024 to 44.8% this year.
Excluding petroleum products, goods exports declined sharply by 32.1% year on year, falling to a four-year low of €2.06 billion. This drop is almost entirely explained by base effects, particularly the exceptionally high level of ship exports recorded in 2024.
Imports rise and trade deficit widens
On the import side, total goods imports increased by 6.8% year on year during January–August 2025. The rise was mainly driven by higher imports of chemical products, motor vehicles and pharmaceuticals.
The surge in petroleum exports, which has supported activity in the refinery sector, is likely linked to the revival of seaborne trade through the Red Sea route. This is also reflected in a 51.3% year-on-year increase in petroleum imports. Despite this, the petroleum products trade deficit narrowed by 45.9% year on year.
In contrast, the overall merchandise trade deficit deteriorated by 24.5% year on year. This worsening reflects the combined impact of reduced ship exports and increased imports of chemicals and vehicles, underscoring the role of idiosyncratic factors rather than broad-based trade weakness.
Merchandise trade overview
Cyprus’s overall merchandise trade (€ million, January–August)
- Total imports of goods: €8,903 (2025), up from €7,782 in 2024
- Total exports of goods: €3,729 (2025), up from €3,627 in 2024
- Merchandise trade balance: –€5,174 (2025), compared with –€4,155 in 2024
Cyprus–US merchandise trade (€ million, January–August)
- Imports from the US: €134.9 (2025)
- Exports to the US: €50.4 (2025)
- Trade balance with the US: –€84.5 (2025), widening from –€64.6 in 2024
Sources: Cystat, Eurostat, Eurobank Research