Cyprus Economic Outlook Strengthens With Revised Growth Projections

by THEFUTURE.TEAM

November 18, 2025

The European Commission’s latest economic forecast has raised Cyprus’ growth projection for 2025 to 3.4 per cent, a revision that reflects the enduring resilience and dynamic progress of the island nation even amid persistent geopolitical challenges. Finance Minister Makis Keravnos hailed the findings as a testament to Cyprus’ steady economic advancement and the strength of its fundamentals.

Robust Policy and Strategic Reforms

In an official statement, Keravnos emphasized that the upward revision by 0.4 percentage points from the spring forecast is especially encouraging. The Finance Minister pointed to the government’s consistent economic policy, which is paving the way for a sustainable, outward-looking, and socially inclusive growth model. The report also noted a modest upward adjustment for 2026—now forecast at 2.6 per cent—positioning Cyprus third in the Eurozone behind Ireland and Malta.

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Foundations of Stable Growth

The revised projections underscore a broader vote of confidence in Cyprus’ economic strategy. Keravnos highlighted that the steady progress is driven by a measured and responsible fiscal approach, with ongoing reforms such as an anticipated tax overhaul aimed at boosting incomes, attracting high-quality investments, and fortifying the economy’s competitive edge. This aligns with the government’s commitment to stability, planning, and fiscal prudence.

Wider Economic Landscape

The comprehensive outlook from the European Commission projects domestic demand as the primary engine for growth, with household consumption moderating as real wage growth decelerates. Meanwhile, increased investment backed by the completion of projects under the Recovery and Resilience Plan (RRP) is expected to propel economic activity in 2026. Services exports are anticipated to remain robust, bolstering the overall growth narrative.

Inflation, Labour Market And Public Finances

Inflation is projected to ease, with headline rates falling to 0.9 per cent in 2025 before gradually rising to 1.9 per cent by 2027. Although core inflation will remain slightly elevated, medium-term expectations suggest it will stabilize slightly below 2 per cent. Labour market indicators remain strong, with unemployment expected to stabilize at 4.7 per cent in 2025 before easing further in subsequent years. Additionally, public finances are on a firm footing, with the government balance forecast to be in surplus at 3.3 per cent of GDP in 2025 and with public debt decreasing steadily to 45.7 per cent of GDP by 2027.

Conclusion

The upgraded economic forecast not only reinforces the confidence of European institutions in Cyprus but also validates the government’s strategic initiatives and reforms. As the island economy continues on its resilient path, stakeholders can look forward to a period of stable growth, sound fiscal management, and progressive economic transformation.

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Bank of Cyprus Upgrade Signals Fresh Optimism For Greek And Cypriot Banks

by THEFUTURE.TEAM

June 26, 2026

Regional Banks Enter A More Favorable Cycle

Bank of Cyprus and Eurobank are well positioned to benefit from a renewed re-rating of Greek and Cypriot bank stocks, according to Cyprus-based investment firm Roemer Capital, which upgraded Bank of Cyprus to a buy rating and reaffirmed its positive view on Eurobank.

The firm cited easing geopolitical tensions, resilient economic growth in Greece and Cyprus, lower funding costs and Greece’s expected transition to developed-market status as the main factors supporting the sector.

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Roemer Capital also lowered its cost of equity assumptions, updated its forecasts following first-quarter 2026 results and extended its valuation horizon to the end of 2027, raising target prices across its banking coverage.

Bank Of Cyprus Gets The Largest Upgrade

Bank of Cyprus received the biggest revision, with Roemer Capital upgrading the stock from hold to buy and setting a target price of €11.10, implying potential total upside of 27%.

The firm highlighted the bank’s strong capital generation, profitability and projected 100% dividend payout, describing it as the strongest capital-return story among the banks under coverage. Roemer Capital maintained its buy rating on Eurobank, assigning a target price of €4.90 and forecasting potential upside of 28%. The report said the bank is well placed to benefit from loan growth, improving operating performance and merger-and-acquisition synergies.

National Bank of Greece and Piraeus Bank also retained buy ratings, with expected returns ranging from 25% to 36%. Optima Bank was upgraded to buy, while Alpha Bank remained at hold on valuation grounds.

Why Growth Still Sets The Region Apart

According to Roemer Capital, Greek and Cypriot banks continue to benefit from stronger economic fundamentals than many western European peers. The report pointed to faster economic growth, healthier balance sheets, low levels of non-performing exposures, capital ratios approaching 20% and strong customer deposit bases.

Analysts expect performing loans across the sector to grow at a compound annual rate of 6% to 8% through 2028, supported by private investment, digitalisation, green manufacturing, supply-chain expansion and a gradual recovery in household lending.

The report also said the conclusion of lending under the EU Recovery and Resilience Facility is unlikely to materially affect credit growth, as banks have already shifted back towards traditional commercial lending. Roemer Capital expects Euribor to remain between 2.2% and 2.5%, a level it believes should support both lending activity and net interest margins.

Geopolitics, Valuation And Market Structure Support The Case

The report said improving geopolitical conditions have strengthened the investment outlook, noting that Brent crude prices have largely returned to pre-war levels while Greek government bond yields have stabilised at around 3.5%. Although geopolitical risks remain, Roemer Capital believes the likelihood of a major inflationary shock or significant pressure on bank profitability has eased.

Another important catalyst identified by the firm is Greece’s expected promotion to developed-market status by FTSE Russell, STOXX and MSCI over the coming months.

According to the report, the reclassification should improve liquidity and attract a broader base of international investors. Roemer Capital also said Euronext’s acquisition of the Athens Exchange is expected to strengthen market infrastructure and increase international visibility, particularly for Bank of Cyprus and Optima Bank.

The firm noted that Bank of Cyprus has already benefited from its Athens listing, with average daily trading value increasing from less than €400,000 before its September 2024 move to nearly €6 million afterwards.

Economic Momentum Remains A Core Tailwind

Roemer Capital said both Greece and Cyprus have moved beyond post-crisis recovery and are now supported by private-sector-led growth. For Cyprus, the report highlighted recent tax reform and efforts to simplify the legal and regulatory framework, while also noting that limited foreign banking competition continues to support domestic lenders.

Overall, Roemer Capital expects Greek and Cypriot banks to remain well-positioned for profitable loan growth over the coming years.

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