Current account deficit rose to 9.1% of GDP in 2022

Cyprus’ current account deficit rose significantly in 2022, reaching €2,463.3 million – that is 9.1% of the country’s GDP, compared with a deficit of €1,638.2 million in 2021 (6.8% of GDP).

According to data released by the Central Bank of Cyprus (CBC), the increase resulted from a deterioration of the deficit in Goods (from €4,317.8m to €5,883.5m) and an increase in the deficit of Primary Income (from €2,029.2m to €2,145.8m).

These developments were partly offset by the improved surplus in Services (from €5,019.5m in 2021 to €5,782.2m in 2022), and the reduced deficit of Secondary Income (from €310.7m to €216.2m).

By country, Cyprus’ current account shows that in 2022, Cyprus recorded bilateral surpluses vis-à-vis the USA (€1,063.8m, up from €881.6m the previous year), Germany (€608.9m, up from a deficit of €235.8m a year earlier) and the United Kingdom (€624.9m, up from €214.8m).

On the other hand, bilateral deficits in the current account were recorded vis-à-vis Russia (€2,431.0m, up from a deficit of €4,565.0m a year ago) and Greece (€2,581.2m compared with a deficit of €1,728.8m in 2021).

Bilateral data vis-à-vis the EU (excl. UK) marked a deficit of €1,498.7m (from a deficit of €106.2m in 2021), and a deficit of €2,597.6m was recorded vis-à-vis the Eurozone (from a deficit of €789.8m in 2021).

Furthermore, Cyprus’ international investment position (IIP) recorded a small deterioration in 2022, presenting a net liability position of €28,439.5m, compared with a net liability position of €28,282.4m in 2021.

This small deterioration in 2022 was mainly the result of the increase of the net liability position of Direct Investments and to a lesser extent due to the increase of the net liability position of Financial Derivatives, while net liability positions of Portfolio Investments and Other Investments, as well as the Reserve Assets, positively impacted the net International Investment Position, thus mitigating the overall deterioration.

According to the CBC, the gross External Debt decreased to €167,649.7m in 2022, compared with €168,002.7m in 2021, with external assets in debt instruments increased to €152,293.4m from €130,872.1m in 2021. Consequently, net External Debt (gross external debt less external assets in debt instruments) decreased by €21,774.3m to €15,356.3m in 2022.