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Cyprus Central Bank Revises GDP Growth Projections Upward

The Central Bank of Cyprus (CBC) has revised its GDP growth forecast for 2024, increasing it by 0.2 percentage points to 3.7%. This adjustment reflects stronger domestic demand, with private consumption playing a pivotal role, supported by the continued resilience of the Cypriot economy.

However, forecasts for 2025-2026 have been slightly downgraded due to the impact of rising imports needed to meet elevated domestic demand. While exports, particularly non-tourism services, remain a growth driver, they are not sufficient to fully offset the increase in imports.

Labor Market Nearing Full Employment

The labor market in Cyprus continues to strengthen, with unemployment expected to fall to 5% in 2024, down from 5.8% in 2023. This trend is forecast to continue, with unemployment rates projected to drop to 4.9% in 2025, 4.7% in 2026, and 4.6% in 2027, approaching conditions of full employment.

The improved GDP outlook has led to a downward revision of the 2024 unemployment forecast by 0.1 percentage points. The sustained growth momentum of the economy is seen as the key factor driving this positive trend.

Inflation Stabilizing Towards Target Levels

Inflation, as measured by the Harmonized Consumer Price Index (HICP), is expected to decline to 2.2% in 2024 from 3.9% in 2023, moving closer to the medium-term target of 2%. This stabilization is attributed to easing external inflationary pressures, including a reduction in energy and raw material prices, as well as the lagged effects of eurozone monetary policy, which continues to temper inflation.

Wage growth is anticipated to remain moderate, helping to limit inflationary pressures. However, the gradual introduction of a green carbon tax from 2025 may result in modest fuel price increases.

The normalization of inflation for industrial goods (excluding energy) is also expected between 2025 and 2027, following the high levels seen in 2022-2023. Core inflation—excluding energy and food—is forecast to decline from 3.8% in 2023 to 2.6% in 2024, 2.0% in 2025, 1.9% in 2026, and 2.0% in 2027. Service price inflation is expected to decelerate during the 2025-2027 period.

The 2024 inflation forecast was revised upward by 0.1 percentage points compared to September 2024 projections, reflecting higher-than-expected service price inflation.

Risks And Prospects

The economic outlook for 2024 is balanced, while projections for 2025-2027 suggest a slight increase in downside risks.

Key downside risks include ongoing geopolitical tensions and weaker-than-expected external demand amid heightened global trade uncertainty. Domestically, the introduction of new taxes on multinational corporate profits could negatively impact economic performance, although the extent of this effect is uncertain. Slower-than-expected easing of financing conditions may also curb domestic demand.

On the upside, stronger-than-anticipated private consumption, driven by lower household savings rates, could boost economic performance.

Inflation risks for 2024 are balanced, while those for 2025-2027 lean slightly upward. Upside risks include potential geopolitical escalations, trade policy uncertainties (such as new US tariffs and EU retaliatory measures), and climate-related impacts like extreme weather events and the implementation of green taxation. Wage growth exceeding expectations and higher corporate profit margins could also contribute to inflationary pressures.

Conversely, inflation could underperform baseline projections if financing conditions ease more slowly than expected or if heightened geopolitical tensions unexpectedly weaken the global economic environment.

Cyprus Accelerates Push Into Mountain And Rural Tourism As It Seeks Year-Round Growth

Cyprus is stepping up investment in mountain and rural tourism as the government works to draw more visitors inland, support local communities and strengthen the island’s position as a year-round destination, Deputy Tourism Minister Kostas Koumis said on Thursday in Agros.

Authenticity Emerges As A Core Competitive Advantage

Speaking at the conference “Mountain Areas, Special Interest of Tourism and Community Resilience”, held as part of Mountain Games Cyprus 2026, Koumis said authenticity remains one of the sector’s most valuable assets. The character of rural and mountain communities, he argued, is central to their long-term appeal.

The four-day Mountain Games programme, organised during the European Week of Sport, features 35 activities across eight Troodos villages within the UNESCO Global Geopark.

Tourism Strategy Puts Nature And Rural Experiences At The Forefront

Koumis said the government and the Deputy Ministry continue to invest in mountain and rural areas, while recent studies show travellers increasingly want nature, outdoor activity and closer contact with local communities.

Under the National Tourism Strategy 2035, nature and rural tourism — alongside cultural tourism — have been identified as priority special-interest segments, with hiking trails playing a central role. The objective is clear: extend the tourism season, spread visitor traffic further inland and reinforce Cyprus as a destination that can attract demand throughout the year.

Troodos, Koumis said, has “all the ingredients to meet this demand”, citing its walking trails, wine villages, Geopark status and UNESCO-listed monuments.

Upgrading Trails To European Standards

To support that ambition, the Deputy Ministry is working closely with the Forestry Department to promote walking and cycling tourism, improve route signage and upgrade forest recreation infrastructure.

Koumis also highlighted the publication by the Cyprus Organisation for Standardisation (CYS) of the national standard for the design, construction, signposting and management of hiking trails. For the first time in Cyprus, the standard sets national criteria covering trail characteristics, difficulty levels and minimum requirements for design, construction, marking and maintenance.

The aim is to deliver trails that are safe, accessible and well maintained, while enhancing the visitor experience and better reflecting the natural and cultural identity of each area.

Cyprus is also seeking to align its hiking infrastructure more closely with recognised European benchmarks. As a member of the European Hiking Federation, the Deputy Ministry is working to apply the “Leading Quality Trails – Best of Europe” criteria, with the longer-term goal of creating the conditions for the certification of Cyprus’ first long-distance trail.

A two-day training workshop on the scheme will take place in Spilia on September 25 and 26, with support from the Deputy Ministry. The session will focus on day hiking routes and help local authorities, government services and tourism organisations assess and upgrade routes. The next target is certification of three to four day routes within the Troodos Geopark.

Linking Outdoor Tourism With Local Economies

The wider strategy goes beyond infrastructure. The Deputy Ministry also wants outdoor tourism to support village businesses, local products and rural traditions more directly.

Koumis pointed to the Heartland of Legends circular route, where hiking, cycling, climbing and birdwatching are integrated with themes inspired by the island’s traditional rural activities. A similar approach underpins Taste Cyprus and the island’s wine routes, which connect tourism with local production and gastronomy so that more economic value stays within the communities themselves.

The Christmas Villages initiative is another key part of the effort, giving visitors “another reason to choose the mountains in winter” while supporting accommodation, hospitality and other local businesses beyond the peak summer period.

Accessibility Becomes Part Of The Quality Proposition

Accessibility is also being treated as part of the overall tourism product, not simply as a compliance issue. Koumis said the Deputy Ministry does not see accessibility as “a formal obligation”, but as a core element of quality, equality and social responsibility.

Grant schemes have already supported accessibility upgrades, specialist-interest facilities and health and wellness services at tourism accommodation. In addition, the Deputy Ministry has identified more than 300 tourism sites accessible to people with different disabilities.

Cyprus is also reviewing the experience of the Italian Hiking Federation, particularly in relation to trail assessment and certification, the training of accompanying guides and the use of specialist equipment for people with mobility disabilities.

More Than €15 Million Channelled Into Rural Projects

Rural tourism investment has also continued through the Recovery and Resilience Plan. Under the second call of the grant scheme for the revival of rural, mountain, border and remote areas, 152 projects have been completed, supported by €7 million in funding.

In parallel, 46 hotels and tourist accommodation businesses in rural, mountain and remote areas were approved for grants worth €6.9 million, while a further €1.3 million was allocated in 2025 for upgrades to restaurants and shops selling traditional food products.

Taken together, the three funding streams amount to more than €15 million in support for rural projects, accommodation and businesses linked to local food production.

Supporting Communities, Not Just Visitor Numbers

Koumis described support for the countryside as a wider government priority, aimed at keeping mountain communities economically active and encouraging younger people to return.

Tourism also plays an important role in the National Strategy for the Development of Mountain Communities, coordinated by the Commissioner for the Development of Mountain Communities, while agricultural support under the Common Agricultural Policy Strategic Plan 2023-2027 helps sustain the local production that underpins much of Cyprus’ gastronomic tourism offering.

Koumis also referred to conclusions adopted by the EU Competitiveness Council during Cyprus’ EU presidency, which placed greater emphasis on rural, mountain and remote destinations, as well as accessible and inclusive tourism models.

Ultimately, he said, the goal is to develop mountain tourism in a way that “respects the identity of each place” while ensuring tourism delivers meaningful and lasting benefits for the communities that host it.

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