The Central Bank of Cyprus has made a slight upward revision to its forecasts for the Cypriot economy in 2025, now expecting growth of 3.3%. For 2026–27, GDP is projected to expand by 3% annually. The increase is attributed to stronger domestic demand across the forecast horizon.
Domestic demand is expected to be supported by higher private consumption, driven by rising real disposable household income as inflationary pressures ease, and by the continued resilience of the labour market. Although the pace of private consumption growth is forecast to normalise in the coming years, it is expected to remain a key driver of economic activity.
Significant contributions to domestic demand are also anticipated from large-scale private non-residential investments currently under way. These include infrastructure projects to support digital and green development, as well as other reform-related projects under the Recovery and Resilience Plan. Residential investment is also expected to contribute, though to a lesser extent.
Despite uncertainty surrounding U.S. tariff policy and its impact on global trade, the Central Bank does not foresee a significant negative effect on Cyprus’ investments or private consumption, given the country’s very limited trade in goods with the United States. Any economic impact, it noted, would be indirect, through a potential deterioration in global economic sentiment and Cyprus’ reliance on external demand for services.
CNA
