IMF assessment forecasts slowdown for Cyprus economy in 2026

Following an Article IV Consultation between April 22 and May 4, 2026, the International Monetary Fund (IMF) released its annual health check of the Cypriot economy. The IMF projects GDP growth will moderate to 2.6 percent in 2026, down from 3.8 percent in 2025, primarily due to higher energy prices, geopolitical tensions in the Middle East, and a temporary decline in tourism. In an adverse scenario where regional conflicts persist, growth could drop to 1.7 percent. Inflation is expected to rise to 3.5 percent this year before cooling to 1.5-2 percent in 2027. Despite these headwinds, the IMF noted that Cyprus maintains strong fundamentals and a declining public debt, which is projected to reach 50.5 percent. The Cypriot Ministry of Finance welcomed the report, highlighting the economy's overall resilience. To sustain long-term growth, the IMF recommended structural reforms, including a more efficient judicial system, investment in a skilled workforce, and further digitalization. The organization also urged authorities to maintain fiscal discipline while fostering quality investments.