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Cyprus Records 3% Economic Growth In Q1 2026

by THEFUTURE.TEAM

June 2, 2026

In a strong demonstration of economic resilience, Cyprus recorded a 3% year‐on‐year growth in the first quarter of 2026, according to preliminary data from the Cyprus Statistical Service. The rebound was largely underpinned by robust household spending, a surge in exports, and vigorous activity across key service sectors.

Economic Performance Overview

Adjusted for seasonal fluctuations and working days, the country’s real gross domestic product (GDP) increased by 0.2% compared to the last quarter of 2025. This performance reflects a balanced mix of demand-driven domestic spending and a buoyant external sector, reinforcing Cyprus’ reputation as a resilient economy.

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Service Sector Growth Drives Expansion

The backbone of this growth came from sectors such as wholesale and retail trade, transport, accommodation and food services, along with strong performances in both information and communication and financial and insurance activities. Notably, the information and communication sector experienced the fastest annual expansion at 5.4%, while construction posted a healthy 4.9% increase. Broader segments encompassing trade, transport, accommodation, and food services reported a 4.4% rise.

Household Consumption Fuels Recovery

Private consumption remained a pivotal growth driver. Expenditures by households and non-profit institutions surged by 5.1% over the same period last year, complementing a 4.6% rise in government spending. Overall, total final consumption expenditure climbed by 4.9% year-on-year, underscoring the importance of internal market dynamics in sustaining economic momentum.

External Sector Performance And Investment Concerns

Export activity was particularly noteworthy, with goods and services exports increasing by 10.5% and reaching €8.68 billion in real terms. Imports grew at a comparable pace, up 10.4% to €8.18 billion, highlighting a balanced trade environment driven by continuous economic demand. On the flip side, investment showed signs of deceleration. Gross fixed capital formation advanced only modestly by 1.5% year-on-year and experienced a 5.2% decline from the previous quarter. Excluding ships and aircraft, overall investment fell by 2.3% annually, signaling softer performances in segments less influenced by high-value transport transactions.

This steady yet uneven expansion presents both opportunities and challenges for policymakers and industry leaders. As Cyprus navigates potential headwinds in investment while capitalizing on strong service sector fundamentals, strategic initiatives may be required to foster sustained growth across all economic segments.

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Cyprus Remains Among EU’s Lowest Renewable Electricity Producers

Cyprus remained among the European Union’s weakest performers in renewable energy adoption in 2025, with renewables accounting for 27.5% of gross electricity consumption, according to new data published by Eurostat.

Across the EU, renewable sources supplied 49.9% of gross electricity consumption last year, bringing the bloc close to generating half of its electricity from renewable energy.

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Cyprus Remains Among The EU’s Lowest Performers

Cyprus ranked among the EU countries with the lowest share of renewable electricity, ahead of only Malta at 11.2%, the Czech Republic at 19.2%, Luxembourg at 23.3% and Slovakia at 24.1%.

Across the country’s broader energy system, renewables accounted for 21.5% of gross final energy consumption in 2025.

EU Renewable Electricity Continues To Grow

Renewables supplied 49.9% of gross electricity consumption across the EU in 2025, up from 47.5% a year earlier. Since Eurostat began collecting comparable data in 2004, the share has risen from 15.9%.

Austria recorded the highest share at 90.8%, followed by Sweden at 89.2%. Denmark generated 77.7% of its electricity from renewable sources, followed by Portugal at 65.6%, Greece at 60.9% and Spain at 60.7%.

Overall Energy Transition Still Has Work Ahead

Renewables accounted for 26.2% of the EU’s gross final energy consumption in 2025, up from 25.2% in 2024 and 9.6% in 2004.

Despite the increase, the bloc remains below its legally binding target of 42.5% by 2030. According to Eurostat, achieving that goal will require an average annual increase of 3.3 percentage points between 2026 and 2030.

Sweden recorded the highest overall renewable energy share at 65.4%, followed by Finland at 53% and Denmark at 48.2%. Belgium recorded the lowest share at 14.9%, followed by Slovakia at 16.3% and Ireland at 17.2%.

Heating And Cooling Also Show Steady Progress

Renewable energy accounted for 27.4% of heating and cooling across the EU in 2025, the highest level since comparable records began in 2004. The share increased by 0.7 percentage points from 2024, slightly below the long-term annual average increase of 0.75 percentage points.