Cyprus’ Economic Strategy: Aiming for Sustainable Growth by 2028

by News Editor

June 13, 2025

Strategic Fiscal Policies to Boost Cyprus’ Economy

The Finance Ministry recently unveiled its strategic fiscal policy framework for 2026 to 2028, laying the groundwork for anticipated economic stability and reduced public debt over the next four years.

Projected economic growth rates vary from 2.9% to 3.1%, while public debt is expected to drop significantly to 43.3% of GDP by 2028. The plan marks a commitment to safeguarding fiscal health amidst geopolitical risks, and a dedication to structural reforms remains key.

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The framework sets budgetary ceilings for ministries and public bodies based on macroeconomic outlooks, striving for transparency and efficient resource use.

The Cyprus government targets a 3.5% budget surplus in 2025, gradually increasing to 3.7% by 2028, reflecting the sound fiscal principles guiding its economic policies.

Inflation control is also on the agenda, poised to stabilize around 2% by 2028, ensuring economic resilience in uncertain times.

Unemployment rates are predicted to linger around 4.5% by 2028, as revised fiscal strategies bolster job creation.

Strategic funding sources include new bond issuances, bilateral loans from the European Investment Bank, and the issuance of individual bonds, all integral to the envisioned fiscal landscape.

Central government revenues are set to climb, with ceilings for expenditures meticulously determined to align with fiscal goals.

Potential risks involve geopolitical instability and economic challenges from existing sanctions affecting Cyprus’s service sector.

With a strong focus on public sector improvements and efficient governance, Cyprus aims to reinforce climate and energy security and push for digital transformation to drive a competitive economy.

As Cyprus gears up for its EU Presidency, it highlights ongoing efforts to implement reforms and investments in various sectors.

The government’s unwavering commitment to fiscal stability aims to enhance the landscape for sectors like tourism and higher education, ensuring a stronger, more resilient economy for the years ahead.

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European Central Bank Report Highlights Stable Inflation and Economic Outlook

by THEFUTURE.TEAM

October 29, 2025

Overview Of Inflation Trends

The latest European Central Bank survey shows a slight decline in median inflation expectations over the next 12 months, decreasing from 2.8% in August to 2.7% in September. Despite this minor adjustment, consumer perceptions of past 12-month inflation have held steady at 3.1% for the eighth consecutive month. Long-term projections for three- and five-year inflation remain stable at 2.5% and 2.2% respectively.

Consumer Expectations Drive Income And Spending Projections

Across the board, expectations for nominal income growth over the upcoming year have remained consistent at 1.1%. However, there is a noticeable shift in spending behavior: while perceived nominal spending growth for the past year slipped slightly to 4.9% from 5.0%, expectations for spending growth over the next 12 months rose to 3.5%. Notably, lower income groups continue to forecast marginally higher spending increases compared to their higher income counterparts.

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Stability In Economic And Labour Market Outlook

Economic growth expectations are modestly pessimistic, with respondents forecasting a contraction of -1.2% over the next 12 months. Concurrently, anticipated unemployment levels remain unchanged at 10.7% a year ahead, though the outlook varies by income, with lower income households expecting unemployment rates as high as 12.7%, while higher income groups maintain expectations around 9.4%. Overall, the slight difference between current and future unemployment suggests a broadly stable labor market outlook.

Housing Market And Credit Conditions

The survey also reveals an upswing in expectations related to the housing market. Home price growth expectations have edged higher to 3.5%, and anticipated mortgage interest rates have risen modestly to 4.6%. Similar to other metrics, expectations vary by income, with lower income households expecting higher mortgage rates. In recent months, a marginal decline in reported credit tightening over the past 12 months contrasts with a renewed forecast of tighter credit conditions in the forthcoming year.

Conclusion

The ECB’s latest findings underscore the delicate balance between stable long-term economic forecasts and short-term adjustments in consumer expectations. The slight dips in inflation expectations, alongside stable perceptions of past inflation, delineate a marketplace that is both cautious and measured. As income, spending, and housing market metrics continue to evolve, these indicators provide critical insights for policymakers and investors navigating an increasingly complex economic landscape.

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