European Commission assessment of Cyprus economy

The European Commission, in cooperation with the ECB, ESM, and IMF, conducted a post-program surveillance assessment of the Cypriot economy between March and April 2026. While the report highlights economic resilience despite tensions in the Middle East, projections indicate real GDP growth will reach 2.3% in 2026 and 2.7% in 2027, following a 3.8% growth rate in 2025. Sources provide conflicting data regarding growth, as one report cited a 3% rate. Inflation is expected to reach 3.6% in 2026 due to energy costs before cooling to 2.2% in 2027. Unemployment is projected to stabilize at a decade-low of 4.2% for 2026 and 2027. The fiscal surplus is forecasted at 2.1% of GDP in 2026 and 2.5% in 2027, with public debt expected to drop to 45.5% by the end of 2027. Finally, the banking sector remains robust, with the CET1 capital adequacy ratio reaching 25.8% as of December 2025.