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Cyprus Economy Poised for Robust 2.9 Percent Growth in 2025, IMF Forecasts

IMF Report Endorses Cyprus’s Economic Resilience

Finance Minister Makis Keravnos welcomed the International Monetary Fund’s latest forecasts as a clear affirmation of Cyprus’s prudent fiscal strategy and continued economic resilience. Speaking at the Presidential Palace following a cabinet meeting, the minister noted that the IMF’s conservative projections actually underscore the nation’s strong economic fundamentals.

Conservative Projections Validate Government Estimates

Keravnos highlighted that IMF forecasts, typically cautious by nature, confirm the government’s optimistic outlook, with the fund now projecting a 2.9 percent GDP growth rate in 2025, slightly above previous estimates. The IMF also anticipates a sustained performance into 2026 with a 2.8 percent expansion, reflecting the country’s commitment to fiscal discipline and stable growth amid global economic uncertainties.

Favorable Outlook on Inflation and Employment

The latest IMF forecast projects an inflation decline to a mere 0.7 percent in 2025—the lowest rate in the euro area—before modestly rising to 1.3 percent in 2026. Moreover, unemployment is expected to remain robustly low, around 4.5 percent, with fiscal surpluses averaging approximately 3 percent of GDP over the period from 2025 to 2028. These figures underpin the governmental claim that the country’s measured policies are successfully weathering global headwinds.

Global Perspectives and Domestic Strength

While the IMF warns of a slight slowdown in global economic growth—from 3.3 percent in 2024 to 3.1 percent by 2026—the report positions Cyprus among the euro area’s more stable economies. The nation’s domestic demand and thriving services sector continue to buoy growth, even as challenges such as expanding current account deficits, driven by increased imports and heightened service activity, loom on the horizon.

Strategic Implications for Policy and Investment

The IMF’s favorable economic outlook for Cyprus lends credence to both governmental forecasts and the strategic initiatives that have been instrumental in steering the economy through turbulent times. This robust projection not only reassures investors of Cyprus’s economic trajectory but also reinforces the importance of disciplined policy measures in sustaining long-term growth, especially amidst global economic volatility.

Mortgage And Business Loan Rate Dynamics Among Cyprus Banks

Stable Mortgage Loan Rates Post-Mergers

Recent consolidations in the Cyprus banking sector have led to a striking uniformity in mortgage loan interest rates. For example, data from November 2025 reveal that Bank of Cyprus, Eurobank Ltd, and Ancoria Bank are all offering an average rate of 2.98%. Alpha Bank even offers a marginally lower rate of 2.81% for home purchases, whereas smaller market players continue to provide loans at higher costs.

Differentiated Business Loan Offerings

In contrast, business loan interest rates demonstrate greater variability. For loans up to €1 million, Alpha Bank offers the most competitive rate at 3.31%, followed by the National Bank of Greece (Cyprus) at 3.78% (NBG Cyprus). Eurobank Ltd, Kyprian Bank of Development, and Bank of Cyprus post higher averages at 4.00%, 4.46%, and 4.47% respectively, while Societe Generale Bank Cyprus and Banque SBA register even steeper rates at 6.05% and 6.54%.

For loans exceeding €1 million, the trend remains similar: Alpha Bank leads with 3.64%, trailed by National Bank of Greece (Cyprus) at 3.99% and Bank of Cyprus at 4.18%. Eurobank Ltd and Kyprian Bank of Development follow with rates of 4.54% and 4.30%, whereas Societe Generale Bank Cyprus stands out with an average rate of 6.23%.

Competitive Deposit Rates Reflect High Liquidity

Deposits in Cyprus are offered at some of the lowest interest rates in the Eurozone, a situation that reflects the exceptionally high liquidity across the local banking systems. With a Liquidity Coverage Ratio (LCR) recorded at 319% in November 2025, well above the Eurozone median of 191%, major institutions such as Bank of Cyprus, Eurobank Ltd, and Alpha Bank feature household deposit averages of 0.67%, 1.11%, and 1.36% respectively.

Meanwhile, smaller banks including Ancoria Bank, National Bank of Greece (Cyprus), and Kyprian Bank of Development report higher deposit rates of 1.47%, 1.49%, and 1.25% respectively. For business term deposits (up to one year), Ancoria Bank offers the highest average rate at 1.51%, closely followed by Alpha Bank at 1.43%. Other institutions maintain averages between 1.12% and 1.42%, underscoring a competitive yet stratified market landscape.

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