Cyprus economic growth projections for 2025-2027

The Economic Research Centre of the University of Cyprus released its July 'Economic Outlook' report, projecting that the island's GDP growth will reach 3.8% in 2025. This figure is expected to decelerate to 2.7% in 2026 before recovering to 3.1% in 2027. The 2026 forecast represents a downward revision of 0.2 percentage points compared to the previous analysis conducted in April.

The downward adjustment is attributed to a slowdown in economic activity during the first quarter of 2026, both within Cyprus and across the eurozone. Leading indicators from April to June signal heightened uncertainty, primarily driven by the ongoing conflict in the Middle East. This instability has fostered inflationary pressures, diminished labor demand in specific sectors, and dampened consumer and business confidence. Additionally, tightened financing conditions are contributing to the cooling of the economic climate.

Despite these challenges, researchers maintain that the Cypriot economy remains resilient. This outlook is supported by sustained low unemployment rates, fiscal stability, and a healthy state of public finances. Furthermore, the report notes that the recent increase in new housing loans provides an additional buffer against broader economic headwinds.