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Cyprus’ Economic Landscape: IMF Cautions Fiscal Prudence Amidst Economic Shifts

by News Editor

March 31, 2025

With economic challenges persisting, the International Monetary Fund (IMF) is advising Cyprus to exercise fiscal caution, particularly in public sector spending, as the risk of inflation remains a pressing concern.

The recent IMF Article IV consultation emphasized Cyprus’s economic resilience, which has seen a phenomenal growth of 20% over the past five years despite global challenges like the pandemic and geopolitical tensions.

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Understanding The Current Economic Growth

Though Cyprus stands out with one of the highest growth rates in the euro area—courtesy of vibrant tourism and ICT sectors—signs of moderate overheating are emerging. Even as inflation trends downward, it remains a potential threat, hovering above the 2% mark.

The growth rate is set to temper to around 2.5% this year, stabilizing at 3% in the medium term. Yet, the IMF advises keeping a tight rein on fiscal policies to lower public debt below 60% of GDP, amid rising costs in sectors like energy and aging-related expenses.

Real Estate Vigilance And Financial Stability

Despite the robust performance of Cyprus’s financial sector, the IMF stresses continued vigilance over the real estate market due to its systemic risk, particularly as collateral. Non-performing loans have declined, aided by economic growth and effective schemes such as mortgage-to-rent solutions.

Structural Reforms: The Way Forward

Long-term growth hinges on vital structural improvements—especially in judicial and labor sectors. Enhancements in judicial efficiency and labor market policies are crucial not only for productivity but also for sustaining investment-driven growth. Focused strategies to align skills in the workforce could further bolster economic stability.

Energy And Climate Commitments

Energy reforms are pivotal in reducing costs and strengthening Cyprus’s sustainability goals. Projects like the Vassiliko LNG terminal and the Great Sea Interconnector must be prioritized, with their long-term viability guiding the nation toward becoming a renewable energy hub.

Government’s Response

The Ministry of Finance has acknowledged the IMF’s recommendations, emphasizing the importance of fiscal prudence and ongoing efforts to enhance economic resilience. Judicial reforms and strategic workforce alignment remain high on the government’s agenda to ensure sustainable growth.

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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.