Cyprus Economy Seen Slowing In 2026 Before Rebounding In 2027

by THEFUTURE.TEAM

August 3, 2026

Growth Outlook Cools After A Strong 2025

Cyprus’ economy is expected to expand by 2.7% in 2026, down from 3.8% in 2025, before accelerating again to 3.1% in 2027. Compared with April’s forecast, the 2026 projection has been revised down by 0.2 percentage points, while the outlook for 2027 remains unchanged.

Why The Forecast Was Cut

The downgrade reflects a softer pace of economic activity in the first quarter of 2026, both in Cyprus and across the euro area. It also reflects developments seen in leading indicators between April and June, driven largely by the continuing conflict in the Middle East.

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Inflation Pressures And Weaker Confidence

The signals point to rising price pressures, a moderation in labour demand in some sectors, a decline in business and consumer confidence, higher economic uncertainty and tighter financing conditions. Taken together, these factors suggest an economy that is still expanding, but facing a less supportive operating environment.

Resilience Remains The Key Strength

Even so, the Cypriot economy is expected to remain resilient. Support should come from relatively low unemployment, healthy public finances and a recent increase in new housing loans, all of which help cushion the impact of external headwinds.

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Cyprus GDP Growth Accelerates To 3.3% In Q2, Outpacing EU

by THEFUTURE.TEAM

September 7, 2026

Cyprus recorded one of the European Union’s stronger economic performances in the second quarter of 2026, with GDP growth accelerating to 0.8% from 0.5% in the first quarter.

On an annual basis, GDP increased 3.3%, up from 3.0% in the previous quarter, according to Eurostat. That outpaced quarterly growth of 0.6% in the euro area and 0.7% across the EU, while annual growth reached 1.2% and 1.4%, respectively.

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Ireland Leads As Austria Contracts

Ireland posted the EU’s strongest quarterly growth at 10.2%, followed by Slovenia at 1.8% and Lithuania at 1.7%. Austria was the only member state to record a contraction, with GDP falling 0.1%.

Employment Growth Supports Cyprus Economy

Cyprus also recorded stronger employment growth, with employment rising 0.5% in the second quarter after remaining flat in the first. Year over year, employment increased 1.6%, although that was slower than the 2.0% gain recorded in the first quarter.

Across the EU and euro area, employment increased 0.1% in the quarter. Portugal posted the strongest increase at 1.0%, followed by the Czech Republic and Malta at 0.9%, while employment fell 0.8% in Finland and 0.4% in Greece.

Trade Provides Strong Support

Hours worked increased 0.1% quarter over quarter in both the EU and euro area, and were up 0.8% and 0.7%, respectively, from a year earlier.

Household consumption contributed 0.2 percentage points to quarterly growth in both regions, while government consumption had little impact. Investment was broadly flat in the euro area and added 0.1 percentage points to EU growth, while inventory changes reduced growth by 0.5 percentage points in both.

Net trade provided the strongest boost, contributing 0.9 percentage points to euro area growth and 0.8 percentage points to EU growth.

US Growth Slows By Comparison

US GDP increased 0.4% in the second quarter, down from 0.5% in the first. Annual growth slowed to 2.1% from 2.7%. For Cyprus, the latest figures show growth accelerating above the EU average alongside stronger employment, while trade and domestic demand continued to support broader European activity.

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