Improving Cyprus’ position in 2026 in the Global Competitiveness Centre’s competitiveness ranking
(© IMD World Competitiveness Center)
The IMD © World Competitiveness Center in Switzerland has just published the IMD World Competitiveness Yearbook 2026 edition in which the competitiveness of 70 economies is assessed. The Centre for Economic Research of the University of Cyprus and the Employers and Industrialists Federation (OEB) participate in this project as collaborating bodies of the Global Competitiveness Centre.
| Synopsis
In 2026, Cyprus recorded an improvement in the IMD’s competitiveness ranking World Competitiveness Center, rising to 42nd place from 44th in 2025, among 70 countries evaluated. This year’s increase is due to the strengthening of the country’s position in the categories of economic performance, business environment and infrastructure. Low unemployment, employment growth, low inflation in previous years, and service exports were among the factors that contributed to the improved assessment of Cyprus’ economic performance in 2026. In relation to the business environment, the country’s position has been further strengthened, mainly as a result of a significant improvement in assessments of administrative practices and business values, aspects where Cyprus has traditionally been disadvantaged in ranking. In particular, the most notable improvements in 2026 in aspects of administrative practices and business values are linked to the flexibility of businesses and the country’s image abroad. Cyprus’ progress in terms of infrastructure came mainly from the strengthening of the scientific infrastructure. In 2026, there was also a slight improvement in basic infrastructure, but the country still lags significantly behind others, recording the sixth lowest performance among the 70 countries. This year, as in previous years, the assessment reflects serious weaknesses in the management of water resources, energy infrastructure, energy production and electricity costs, weighing on the country’s competitiveness ranking. Cyprus’ position on state policies declined due to the deterioration of the regulatory framework for businesses (e.g. access to capital markets, investment incentives for artificial intelligence, regulatory burden, time to set up a business, shadow economy). Nevertheless, the strong fiscal performance and improvements in the institutional framework (e.g. the country’s credit rating, cost of capital) contained losses at the level of government policies. |
- In 2026, Cyprus ranks 42nd in terms of competitiveness among 70 countries, up two places compared to 2025. This improvement is due to the strengthening of Cyprus’ performance in three of the four categories that make up the overall ranking. More specifically, in this year’s assessment, Cyprus made progress in the categories of economic performance, business environment and infrastructure, while the country’s position deteriorated in the category of state policies. Table 1 presents the ranking of the Cypriot economy (total and by category) over time.
Table 1: Competitiveness ranking of the Cypriot economy
| 2022 | 2023 | 2024 | 2025 | 2026 | |
| Total | 40 | 45 | 43 | 44 | 42 |
| By category | |||||
| Financial performance | 38 | 47 | 28 | 36 | 30 |
| Government policies | 24 | 30 | 28 | 26 | 30 |
| Business environment | 44 | 55 | 55 | 52 | 46 |
| Infrastructure | 40 | 42 | 42 | 46 | 42 |
| Number of countries under assessment | 63 | 64 | 67 | 69 | 70 |
Source: IMD World Competitiveness Yearbook 2026 (© IMD World Competitiveness Center).
- Among the most notable improvements in the overall functioning of the economy identified in this year’s assessment are the slowdown in inflation, the reduction of long-term unemployment, as well as the improved perceptions of the country’s image abroad, business flexibility and tax evasion. On the contrary, among the criteria that have deteriorated sharply compared to last year’s assessment are the slowdown in the long-term growth rate of the labour force, the reduction of fixed capital investment (in real terms), the increase in the homicide rate, the shrinking of forest areas, the inadequate management of water resources, as well as criteria related to the existence of an informal economy, corruption and pollution problems in the country.
- In the 2026 Opinion Survey, the five most important factors that make the Cypriot economy attractive were highlighted in order: (1) the competitive tax regime, (2) the business-friendly environment, (3) the high level of education, (4) the dynamism of the economy and (5) the open and positive business attitude. The first three factors were selected among the top five in the 2025 Survey, while the last two are new additions that have displaced the skilled workforce and political stability from this year’s five. On the contrary, the attractiveness of Cyprus remains low over time in terms of research and development culture, quality of corporate governance and government competence.
- In terms of economic performance, Cyprus ranks 30th out of 70 countries, with its position significantly strengthened compared to 2025 (36th). The rise in this year’s ranking was driven by improvements in ratings in the subcategories of employment (e.g. low unemployment, employment growth), prices (e.g. low inflation, affordable office rents) and, to a lesser extent, international trade. In this year’s ranking, Cyprus maintained its highly favourable ratings in criteria related to exports of services and also improved its position in aspects related to the export of goods. On the contrary, weaknesses in international trade criteria that had been highlighted in previous years, such as the current account balance and trade conditions, also appear in this year’s assessment. In 2026, the country’s position in the domestic economy and international investment subcategories deteriorated further, although Cyprus continues to show advantages over most countries in terms of foreign direct investment and economic resilience.
- In the category of state policies, Cyprus occupies the 30th place, falling by four notches compared to 2025. This year’s decline was mainly due to the deterioration of several criteria in the subcategory of the legal framework for businesses, such as access to capital markets, investment incentives for artificial intelligence, regulatory burden, time required to set up a business and the shadow economy. Cyprus’ assessments in the subcategory of tax policy and social context did not record any substantial changes compared to 2025. However, the country’s position in 2026 strengthened significantly in the sub-category of public finances (e.g. fiscal surpluses, reduction of public debt), while the performance in the sub-category of the institutional framework (e.g. the country’s creditworthiness, cost of capital, spread between borrowing and deposit rates) improved for the third year in a row.
- In the business environment category, Cyprus ranks 46th, further strengthening its position and moving up six notches compared to 2025. The rise in the ranking was mainly the result of a significant improvement in the ratings of almost all the criteria that make up the subcategories of administrative practices and business values, aspects where Cyprus has traditionally been disadvantaged in the ranking. Among the criteria that recorded the most notable improvements are those related to the flexibility of businesses and their ability to respond quickly to opportunities and threats, the ability of boards to exercise effective control, the necessity for economic and social reforms, the image of the country abroad and the receptivity of the local culture to foreign ideas. In addition, in 2026 there was a slight improvement in ratings in the productivity and efficiency sub-category, despite the further deterioration of Cyprus’ position in terms of productivity growth. In this year’s assessment, the country’s performance in the labour market sub-category remained almost unchanged compared to 2025, while in the financing sub-category it deteriorated slightly, with criteria related to the stock market and access to risk capital weighing – as in previous years – on Cyprus’ position.
- In terms of infrastructure, Cyprus ranks 42nd out of 70 countries, rising four notches compared to 2025 and returning to the position it held in 2024 and 2023. This strengthening of position has mainly come from improvements in the subcategory of scientific infrastructure, with notable progress recorded in criteria related to patents (including those related to artificial intelligence), intellectual property rights and knowledge transfer between universities and businesses. Although in 2026 Cyprus saw an improvement in the subcategory of basic infrastructure after three years of marked deterioration, the country is still significantly disadvantaged compared to others, recording the sixth lowest performance. Despite improvements in key infrastructure aspects – such as aviation quality, city management and product distribution infrastructure efficiency – 2026 saw a further deterioration in criteria where Cyprus faced chronic weaknesses. Such criteria, which reflect very serious shortcomings and burden the country’s competitiveness ranking over time, concern the management of water resources, energy infrastructure, energy production and electricity costs. In addition, Cyprus’ position declined slightly in the subcategory of technological infrastructure, as well as in the subcategory of health and environment, with the country lagging behind in criteria related to artificial intelligence skills to serve business needs, ecological balance, forest areas, exposure to particulate matter (PM5) and food waste. Finally, the evaluation in the education sub-category did not record a substantial change compared to 2025, with Cyprus continuing to excel over most countries in criteria such as student mobility, student-teacher ratio, the percentage of the population with tertiary education and the share of women with a degree in the working-age population.
| The IMD © World Competitiveness Center in Switzerland publishes the IMD World Competitiveness Yearbook on an annual basis, which assesses the competitiveness of economies.
The IMD World Competitiveness Yearbook 2026 edition that has just been published includes 70 countries, including Cyprus. The Centre for Economic Research and the Federation of Employers and Industrialists (OEB) are the collaborating bodies of the IMD World Competitiveness Center that contribute to the collection of data for Cyprus. The assessment of the economies was based on 341 criteria, which were formed by official statistics, with reference years mainly in 2024 and 2025, as well as by Opinion Survey data of senior business executives in each country, which was conducted between February and April 2026. The criteria are grouped into four categories, with five subcategories each: 1. Performance of the economy: macroeconomic assessment of the domestic economy, prices and employment trends. 2. State policies: the extent to which state policies are conducive to competitiveness. 3. Business environment: the extent to which the domestic environment encourages businesses to operate in an innovative, profitable and responsible manner. 4. Infrastructure: the extent to which the country’s basic, technological, scientific and human resources meet the needs of businesses. |
Centre for Economic Research, University of Cyprus,
Website: https://www.ucy.ac.cy/erc/el/
