IMF revises growth and inflation outlook for Cyprus economy

On October 13, 2026, the International Monetary Fund (IMF) released its latest World Economic Outlook, providing updated projections for the Cypriot economy. The Fund revised its 2026 GDP growth forecast downward to 2.9%, compared to its April estimate of 3.0%, while adjusting its 2027 growth outlook upward to 3.2%. Significant revisions were also noted for inflation, which is now expected to reach 3.7% in 2026, a notable increase from the previous 2.6% forecast, before cooling to 1.9% in 2027.

These projections differ from the draft 2027 state budget presented to Parliament on October 12 by Finance Minister Makis Keravnos, which anticipates growth of 3.1% for 2026 and 2.9% for 2027. Despite the inflationary pressures, the labor market shows improvement; the IMF now expects unemployment to drop to 4.0% in 2026, down from the previously estimated 4.6%. For 2027, unemployment is projected to rise slightly to 4.4%. The IMF report also highlights structural challenges, specifically noting a high current account deficit and the necessity for Cyprus to adapt its economic strategy following the implementation of the global 15% minimum corporate tax.