Cyprus economic growth forecast revised downward to 2.7 percent for 2026

The Economics Research Centre (CypERC) of the University of Cyprus has published updated economic projections, forecasting a slowdown in real GDP growth from an estimated 3.8 percent in 2025 to 2.7 percent in 2026. This figure marks a downward revision of 0.2 percentage points compared to the center's previous outlook issued in April, with a projected recovery to 3.1 percent growth in 2027.

The decline is attributed to slower GDP growth in Cyprus and the broader euro area during the first quarter of 2026, alongside negative trends in leading economic indicators between April and June. The report highlights the ongoing conflict in the Middle East as the primary source of uncertainty, contributing to rising inflation, which is expected to reach 3 percent in 2026, up from 0.1 percent in 2025. Despite these challenges, experts note that the domestic economy remains resilient due to low unemployment rates, sound public finances, and increased activity in the housing loan market.