Cyprus economic growth slows to 3 percent in Q1 2026

Cyprus reported a GDP growth rate of 3.0% for the first quarter of 2026, marking the slowest pace in ten quarters. This follows growth rates of 4.3% in Q4 2025 and 3.6% in Q1 2025. According to Eurobank Research, the deceleration was primarily driven by the impact of net exports, as imports surged by 10.4% alongside a 10.5% increase in exports. The rise in imports is largely attributed to base effects from reduced investments in transport equipment, such as ships and aircraft, during the same period last year. Conversely, domestic demand showed resilience, with private consumption growth accelerating to 4.9% and public consumption rising by 4.6%. The unemployment rate reached a record low of 4.0% for a first quarter. Gross fixed capital formation declined by 6.9%, which is a significant improvement compared to the 21.7% contraction in the previous quarter. Analysts project that the construction sector will remain a key pillar for economic activity throughout the year.