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Cyprus Central Bank Forecasts Steady Growth Amid Emerging Risks

by THEFUTURE.TEAM

September 25, 2025

The Central Bank of Cyprus has revised its macroeconomic projections for 2025, forecasting a steady expansion of the national economy while cautioning that downside risks could temper future performance. The new estimates raise GDP growth to 3.3% for 2025, downshift unemployment to 4.6%, and predict a marked easing of inflation to 1%.

Steady Growth And Revised Projections

In its September update, the central bank slightly increased the anticipated GDP growth by 0.2 percentage points relative to its June forecast, largely due to a robust tourism sector. Despite these optimistic figures, the projections for 2026 to 2027 remain unchanged, underscoring the confidence in domestic demand as the central engine of economic activity.

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Domestic Demand And Investment Momentum

Domestic consumption is expected to benefit from rising real disposable incomes as inflation pressures wane, thereby supporting private consumption. In addition, major private non-residential investments, particularly in infrastructure that bolsters digital and green development, are projected to significantly advance the growth narrative. Reform initiatives under the Recovery and Resilience Plan will further contribute, albeit with residential investment playing a smaller role.

Inflation Dynamics And Energy Price Pressures

The forecast indicates a steep decline in overall inflation—from 2.3% in 2024 to 1% in 2025—driven primarily by softer non-energy industrial goods and a moderation in food prices. However, inflation is expected to rise gradually in subsequent years, reaching 2% in 2026 and 2.2% in 2027. These adjustments are linked to anticipated increases in energy prices due to the forthcoming introduction of a carbon tax and the expanded EU Emissions Trading System.

Risks And External Influences

While the outlook is generally positive, the central bank has flagged downside risks that could disrupt service exports indirectly through global trade policy uncertainties. Conversely, positive shocks—such as anticipated tax reform, stronger wage gains, and improved profit margins—could bolster private consumption and support economic expansion. Yet, inflation risks remain slightly tilted upward in this environment.

The detailed revisions by the Central Bank of Cyprus reflect a nuanced balancing act: a promising growth trajectory underpinned by domestic demand and tourism, offset by potential external vulnerabilities. The evolving economic landscape calls for vigilant monitoring as global trade dynamics and energy policies unfold in the coming years.

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EU Moderates Emissions While Sustaining Economic Momentum

by THEFUTURE.TEAM

November 15, 2025

The European Union witnessed a modest decline in greenhouse gas emissions in the second quarter of 2025, as reported by Eurostat. Emissions across the EU registered at 772 million tonnes of CO₂-equivalents, marking a 0.4 percent reduction from 775 million tonnes in the same period of 2024. Concurrently, the EU’s gross domestic product rose by 1.3 percent, reinforcing the ongoing decoupling between economic growth and environmental impact.

Sector-By-Sector Performance

Within the broader statistics on emissions by economic activity, the energy sector—specifically electricity, gas, steam, and air conditioning supply—experienced the most significant drop, declining by 2.9 percent. In comparison, the manufacturing sector and transportation and storage both achieved a 0.4 percent reduction. However, household emissions bucked the trend, increasing by 1.0 percent over the same period.

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National Highlights And Notable Exceptions

Among EU member states, 12 reported a reduction in emissions, while 14 saw increases, and Estonia’s figures remained static. Notably, Slovenia, the Netherlands, and Finland recorded the most pronounced declines at 8.6 percent, 5.9 percent, and 4.2 percent respectively. Of the 12 countries reducing emissions, three—Finland, Germany, and Luxembourg—also experienced a contraction in GDP growth.

Dual Achievement: Environmental And Economic Goals

In an encouraging development, nine member states, including Cyprus, managed to lower their emissions while maintaining economic expansion. This dual achievement—reducing environmental impact while fostering economic activity—is a trend that has increasingly influenced EU climate policies. Other nations that successfully balanced these outcomes include Austria, Denmark, France, Italy, the Netherlands, Romania, Slovenia, and Sweden.

Conclusion

As the EU continues to navigate its climate commitments, these quarterly insights underscore a gradual yet significant shift toward balancing emissions reductions with robust economic growth. The evolving landscape highlights the critical need for sustainable strategies that not only mitigate environmental risks but also invigorate economic resilience.