Cyprus fiscal policy report shows economic resilience despite inflationary pressures

Cypriot Finance Minister Makis Keravnos presented the semi-annual Fiscal Policy report to the Cabinet on Tuesday, highlighting that the national economy remains resilient with a 3.3 percent growth rate in the first half of 2026, tripling the EU average. The labour market shows stability with an unemployment rate of 4 percent, and the government maintains a projected fiscal surplus of 900 million euros, or 2.3 percent of GDP.

Despite positive growth, the report warns of rising inflationary pressures, noting that inflation increased from 0.5 percent in January to 3.1 percent in June, with a year-end forecast of approximately 4 percent. To combat this, the government has implemented cost-of-living relief measures totaling 200 million euros. Minister Keravnos stated that the 900 million euro surplus will not be revised at this time, citing geopolitical uncertainty and the energy crisis.

Looking ahead, the government will continue to focus on targeted, short-term relief measures in line with European Commission guidance. Additionally, Cyprus expects credit rating reviews from DBRS Morningstar, Standard & Poor’s, and Capital Intelligence throughout September, which will further assess the country’s economic standing and fiscal trajectory.