Cyprus Central Bank Revises GDP Growth Projections Upward

by THEFUTURE.TEAM

December 20, 2024

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.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

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.

The Future Forbes Realty Global Properties

Cyprus Government Fortifies Economic Resilience Amid Global Uncertainty

by THEFUTURE.TEAM

December 12, 2025

Government Commitment to Stability and Growth

Cyprus continues to build a strong and resilient economic foundation to support business planning and investment, as emphasized by Deputy Minister to the President Irene Piki. Representing President Nikos Christodoulides at the 12th Keve Business Leader Awards, Piki underscored that in today’s volatile global landscape, a consistent and reliable economy remains the cornerstone for long‐term strategic planning and confidence-building among businesses.

Strengthening Competitive Edge and Attracting Investment

Piki lauded the role of the Cyprus Chamber of Commerce and Industry (Keve) for its dedication to promoting Cyprus as an attractive investment destination and for supporting the expansion of local businesses. Reflecting on President Christodoulides’s recent address at Keve’s annual general assembly, she outlined the government’s vision for a more competitive Cyprus, which includes expanding market access, improving financing channels, and implementing a streamlined, business-friendly regulatory framework—all pivotal as Cyprus prepares for its EU Council presidency.

Economic Indicators Reflecting Confidence

Despite global uncertainties, Piki highlighted that the Cypriot economy continues to demonstrate resilience: gross domestic product grew by 3.4% in 2024, and forecasts indicate nearly 4% growth in 2025. With inflation remaining among the lowest in the European Union and unemployment dropping below 5%, these indicators affirm steady economic progress. Furthermore, positive ratings from international credit agencies, which have placed Cyprus in the A category with upbeat outlooks, underscore the success of prudent economic policies.

Fiscal Discipline and Strategic Investments

The government’s upcoming 2026 budget, which reinforces fiscal stability with a surplus balance and targets a decline in public debt to 50.9% of GDP, opens the door for strategic policy interventions. Piki noted that investments in energy, digital infrastructure, technology, and green growth are key priorities. Enhanced by the nearing completion of Recovery and Resilience Plan projects, Cyprus is now setting the stage for the next seven-year EU funding framework, ensuring a robust platform for sustained growth with active collaboration from the business community.

Regulatory Reforms and Market Liberalization

Central to the government’s agenda is the imminent tax reform, expected to be finalized on December 22 and implemented on January 1, 2026. This reform is designed to bolster business liquidity and attract new investments. The establishment of the National Enterprise Development Organisation further complements these efforts by offering financing tools and advisory services for small and medium-sized enterprises. Complementing these initiatives, the Cyprus Equity Fund is actively investing in innovative companies, while the Ministry of Energy grant schemes are projected to mobilize €360 million by 2027 to boost competitiveness.

Accelerating Digital Transformation and Energy Reforms

In its pursuit of a modernized business environment, the government is set to introduce a Business Service Centre in central Nicosia in 2025, consolidating licensing procedures to significantly reduce bureaucratic delays. In tandem, the impending launch of a competitive electricity market in October 2025 will empower companies to select their energy suppliers, fostering market competition and fair pricing.

Nurturing Human Capital

Recognizing the importance of talent in driving economic progress, the government is intensifying efforts to attract skilled professionals back to Cyprus. The Minds in Cyprus initiative, a collaboration with Keve and Invest Cyprus, seeks to reverse the talent drain by engaging Cypriots abroad through a series of events scheduled in the United States, United Kingdom, and Greece during 2026.

Commitment to Sustainable Growth

Concluding her address, Deputy Minister Piki congratulated the award recipients for their innovation and resilience, asserting that their achievements are a testament to the dynamism of the Cypriot business community. The government remains steadfast in its commitment to implementing reforms that support a stable, competitive, and sustainable economic future for Cyprus.

Breaking news