Cyprus economy shows growth in second quarter of 2026

The Cypriot economy experienced a growth acceleration in the second quarter of 2026, reaching a 3.3% year-on-year GDP increase compared to 3.0% in the previous quarter. According to an analysis by Eurobank Research, this performance ranks as the fourth highest among Eurozone countries, demonstrating significant resilience despite the deteriorating international economic environment triggered by the US-Iran conflict.

Domestic expenditure served as the primary driver for this growth. Private consumption rose by 5.4%, while gross fixed capital formation increased by 9.4%. Notably, investment in transport equipment surged by 151.9%, alongside a more modest 4.3% growth in housing investments. These figures highlight the critical role of strong investment activity and consumer spending in sustaining the national economic output during the second quarter.

Looking ahead, early indicators suggest that growth momentum may be maintained in the third quarter, supported by the labor market and real estate sector. However, analysts warn that the outlook remains tempered by the resurgence of inflationary pressures, a decline in tourist arrivals, and the ongoing geopolitical tensions associated with the regional conflict.