A series of economic indicators released in recent weeks point to a slowdown in economic growth, driven mainly by the crisis in the Middle East and its impact on sectors such as consumption and tourism. The effects of the foot-and-mouth disease outbreak have also weighed on the economy, though to a lesser extent.
According to data released by the Statistical Service on Thursday, growth in sales of saloon cars slowed sharply in March. Registrations of passenger saloon vehicles rose by 5.9 per cent year-on-year to 3,710 from 3,504 a year earlier. In February, annual growth had reached 23.8 per cent.
Beer deliveries from factories to the domestic market fell by 16.2 per cent in March 2026, reversing an annual increase of 1.2 per cent recorded in February, according to data published on Holy Wednesday.
Tourism indicators have also turned negative. Data from Hermes Airports show that passenger traffic at Cyprus airports declined by 15 per cent in March 2026.
Economic climate at five-year low
Figures released by the University of Cyprus Economics Research Centre on 26 March show a marked deterioration in economic sentiment in March, with the Economic Sentiment Indicator falling to its lowest level in the past five years.
While economic confidence has been trending downward since January, the sharp drop in March reflects the initial impact of the Middle East crisis on the Cypriot economy, the centre said.
The crisis has also begun to affect corporate results. Earlier this month, technology group Logicom announced that it expects lower turnover in the first quarter of 2026, citing the geopolitical crisis and its negative impact on the broader business environment.
In its latest macroeconomic forecasts for the Cypriot economy, published on 24 March, the Central Bank of Cyprus projected that GDP growth will slow to 2.7 per cent in 2026, down from an estimated 3.8 per cent in 2025.