IMF releases updated economic outlook for Cyprus

The International Monetary Fund (IMF) released its October 2026 World Economic Outlook, providing revised projections for the Cypriot economy. The IMF now expects real GDP growth to reach 2.9% for 2026, a slight downward adjustment from the 3% forecast issued in April. Conversely, the growth projection for 2027 has been revised upward to 3.2% from the previous estimate of 3%. The report follows a 3.8% growth rate observed in 2025, signaling an economic deceleration this year followed by a rebound in 2027.

Inflationary pressures have emerged as a significant focus in the latest data. The IMF predicts annual inflation to hit 3.7% in 2026, significantly higher than the 2.6% forecast in April. By 2027, inflation is expected to ease to 1.9%, also higher than the previously estimated 1.6%. Regarding the labor market, the IMF revised its unemployment outlook, now anticipating a decline to 4% in 2026 compared to the earlier projection of 4.6%. For 2027, unemployment is expected to rise slightly to 4.4%.

These international findings contrast with domestic budget projections presented by Finance Minister Makis Keravnos on October 12, 2026. The national budget proposal estimates economic growth at 3.1% for 2026 and 2.9% for 2027, highlighting a divergence between local government forecasts and those provided by the IMF.