Cyprus slides down the competitiveness ladder
Cyprus has slipped one place in the IMD World Competitiveness Yearbook 2025, ranking 44th globally, according to the latest report published by the Switzerland-based IMD business school in Lausanne.
The country had ranked 43rd in 2024, and despite this year’s minor decline, Cyprus remains significantly behind its 2021 position when it was ranked 33rd.
The World Competitiveness Yearbook evaluates 69 global economies each year and serves as a key reference point for both governments and the private sector.
The ranking is based on four main pillars, which are economic performance, government efficiency, business efficiency and infrastructure.
The data from 20 sub-indicators show that Cyprus continues to balance strong performances in some areas with persistent structural weaknesses.
The strongest area for Cyprus is price levels, where it ranks 14th, while its weakest remains basic infrastructure, where it ranks 68th.
However, the report outlined several key challenges for Cyprus. These include managing the green transition and climate-related risks through investments and reforms.
The report also highlighted the need to address the economic consequences of increased uncertainty in trade policy and geopolitics.
It called for the implementation of fiscal and educational reforms to improve economic outcomes.
Addressing skill shortages, improving productivity and creating quality employment opportunities were also cited as important goals.
Moreover, maintaining the fiscal expenditure trajectory set out in the medium-term fiscal framework is also considered a necessary priority.
The report also identified several strengths in the Cypriot economy. It mentioned that Cyprus recorded a strong GDP growth rate of 3.4 per cent, ranking 16th among the 69 countries, which reflects the resilience of its economy in an uncertain global environment.
Cyprus also maintains a relatively high GDP per capita in purchasing power parity terms, at 59,839 dollars, placing it 26th and indicating a level of prosperity above that of many comparable economies.
Inflation remains relatively low at 2.27 per cent, earning Cyprus 23rd place and providing stability to the business environment.
The country’s social framework was also highlighted in the report, with Cyprus ranking 27th in this area, pointing to positive levels of social cohesion and quality of life.
Public finances were mentioned as another strength, with Cyprus in 32nd place, reflecting sound fiscal balance management and a degree of fiscal flexibility.
The education system also contributed positively to the country’s competitiveness, with Cyprus ranking in 20th place in this area.
However, the report also identified several key weaknesses. The financial sector remains a challenge, ranking 42nd, reflecting difficulties in access to financing.
Elsewhere, productivity and efficiency performance lag behind, with Cyprus in 48th place, indicating inefficient resource utilisation.
Demographic factors and market size continue to constrain Cyprus, with its population at just 0.97 million (67th place) and a workforce of 0.51 million (68th place), limiting both market size and talent pool.
The current account balance remains vulnerable, the report added, with a negative balance of minus 6.83 per cent of GDP, placing Cyprus 65th.
Despite some progress, the country remains in 68th place for basic infrastructure and 49th for technological infrastructure, restricting its capacity for rapid digital transition.
The report further stated that Cyprus maintains selected strengths such as price stability, education and growth, but structural weaknesses in the labour market, education system, healthcare, and infrastructure continue to limit its competitiveness.
Addressing these weaknesses is essential for regaining momentum and enhancing the country’s international position.