Cyprus’ Economic Growth: A 2025 Projection by the European Commission

by News Editor

May 19, 2025

The European Commission has forecasted that Cyprus will see a 3% economic growth in 2025, slightly decreasing to 2.5% in 2026. This upward trend is primarily driven by resilient domestic demand, a robust services export sector, and a strong labor market.

With a 3.4% real GDP growth recorded in 2024, Cyprus has demonstrated robust private consumption, which rose by 3.8%. Investment excluding ship registrations also increased, despite a construction strike at the end of the year.

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Net exports turned positive, bolstered by tourism, ICT, and sea transport. Private consumption is expected to remain a key driver as wages rise and inflation falls, enhancing household purchasing power.

Growth Drivers and Challenges

The projection is supported by ongoing investment and structural transformation within the Cypriot economy, attracting significant investment into emerging sectors like ICT.

However, increased foreign firm activity may lead to more profit repatriation, thereby limiting gains from improved trade balances. The current account deficit is expected to shrink to 5.9% by 2026.

Potential risks include global trade disruptions, particularly impacting Cyprus’s sea transport sector. Nonetheless, Cyprus’s limited direct trade with the US minimizes its exposure to US tariffs.

Recent interest rate cuts have also stimulated loan demand, contributing to Cyprus’s financial momentum.

Favorable Fiscal Outlook

The outlook for Cyprus’ fiscal health remains positive, with a strong budget surplus and a notable decrease in the debt-to-GDP ratio, projected to be 58% in 2025.

Spending will focus on energy projects such as the LNG terminal and social schemes, with revenues anticipated to outpace expenditures due to ongoing economic strength.

Despite these commitments, Cyprus continues to attract transformational ventures, enhancing its economic landscape.

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Bank Of England Holds Rates At 3.75% In Split Vote As Inflation Risks Rise

by THEFUTURE.TEAM

September 17, 2026

The Bank of England kept its benchmark interest rate at 3.75% on Thursday, but the decision was not unanimous. In a 6-3 vote, the Monetary Policy Committee kept rates unchanged, while three members backed a 25-basis-point increase to 4%. Renewed energy price pressures have added to concerns that inflation could remain elevated.

Inflation Pressures Remain

Policymakers said inflation “is likely to rise further over coming quarters,” citing higher and more volatile crude oil and refined energy prices since the conflict began.

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So far, there has been “little evidence” of significant second-round effects, such as broader wage and price increases. Inflation risks, however, are now “tilted to the upside” and have increased since the July Monetary Policy Report.

Energy Prices Add To Inflation Risks

Brent crude has risen 36% since July, reaching $106 a barrel on Sept. 14, while UK wholesale gas prices increased 78% to 207 pence per therm.

Higher energy costs can feed into transport, production and household expenses, raising costs across supply chains. Refinery pressures have also pushed crack spreads, the difference between refined fuel and crude prices, well above pre-conflict levels.

Economy Shows Resilience

Despite the inflation risks, UK economic activity has held up slightly better than the Bank expected. A softer labor market and higher borrowing costs are expected to help reduce inflation over time.

Previous monetary tightening is still working through the economy, according to policymakers. So far, the latest energy shock has not produced clear evidence of a broader wage-price spiral.

Major Central Banks Take Different Paths

The decision comes during a busy period for global monetary policy. The Federal Reserve raised rates Wednesday to 3.75%-4% in its first increase since 2023, while the European Central Bank recently lifted its deposit rate to 2.5%.

The Bank of Japan is due to announce its decision Friday, with markets expecting a rate increase. Thursday’s split vote shows that pressure for tighter policy remains within the Bank of England’s Monetary Policy Committee.

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