University of Cyprus revises 2026 economic growth forecast upwards

The Economics Research Centre (ERC) at the University of Cyprus released updated economic projections on October 30, 2026, revising its growth forecast for the year upward by 0.5 percentage points compared to July estimates. The Cypriot economy is now expected to grow by 3.2% in 2026, slowing from a 4.8% growth rate in 2025, with a further projection of 3.1% for 2027. This upward revision stems from stronger performance data recorded during the second and third quarters of 2026, coupled with positive indicators such as resilient economic confidence and low unemployment.

Despite the growth, the report warns of significant pressures, most notably a sharp acceleration in inflation, which is projected to rise from 0.1% in 2025 to 3.1% in 2026 before easing to 2.3% in 2027. Experts identify geopolitical instability, particularly the ongoing conflict in the Middle East, as the primary source of uncertainty. These tensions threaten to disrupt supply chains and maintain high energy costs for households and businesses, posing risks to both the projected growth rate and inflationary outcomes.