EU accounts for one fifth of Cyprus foreign direct investment

Foreign direct investment in Cyprus totalled €365.07 billion in 2024, with Russia remaining the largest single source despite a sharp decline, according to data on inward investment positions published on Wednesday by the Central Bank of Cyprus (CBC).

The central bank said €83.46 billion of the total stock of inward foreign direct investment originated from the Russian Federation, accounting for 23 per cent of the overall amount.

Investment originating from the 27 EU member states represented 20 per cent of the total, with a combined value of €74.36 billion.

Within the EU, Luxembourg held the largest share, amounting to €32.1 billion, which corresponds to 9 per cent of total inward foreign direct investment and 43 per cent of EU-sourced investment.

The Netherlands followed with €6.9 billion, representing 2 per cent of the total and 9 per cent of inward investment from the EU.

Outside the EU, the United States accounted for €66.57 billion, or 18 per cent of the total, while the United Kingdom contributed €17.17 billion, equivalent to 5 per cent.

Inward foreign direct investment from Ukraine stood at €10.64 billion, representing 3 per cent of the total.

Further inflows included €8.4 billion from the Cayman Islands, €2.4 billion from the British Virgin Islands, and €3.5 billion from the Marshall Islands.

The data also showed €5.1 billion originating from Israel, alongside €7.6 billion from other countries in the Near and Middle East.

Compared with previous years, the Central Bank of Cyprus data indicate a continued downward trend in inward foreign direct investment positions.

Total foreign direct investment stood at €489.4 billion in 2022 before declining to €394 billion in 2023 and further to €365 billion in 2024.

Of the €124 billion reduction recorded between 2022 and 2024, €52 billion was attributed to a fall in investment originating from Russia.

Russian inward foreign direct investment declined from €135.7 billion in 2022 to €83.46 billion in 2024, according to the central bank figures.

On a year-on-year basis, the largest increase in inward foreign direct investment came from Luxembourg, which recorded a rise of €10 billion.

By contrast, the most significant decreases were recorded from the United States, down €15.1 billion, Switzerland, down €14.7 billion, and the United Kingdom, down €10 billion.

The Central Bank of Cyprus said the publication of these figures aims to highlight the true origin of inward foreign direct investment in Cyprus.

It should be mentioned that these figures refer to foreign direct investment positions, which measure the accumulated stock of cross-border equity and intercompany loans recorded in Cyprus, rather than new investment flows into the real economy.

Because Cyprus hosts many holding, financing and treasury companies, such balance-sheet positions can far exceed the country’s GDP without implying a comparable level of physical investment or domestic economic activity.