Opens in a new tab

Breaking news

Cyprus Economy Seen Slowing In 2026 Before Rebounding In 2027

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.

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.

Retail’s AI Push Faces A Cybersecurity And Regulatory Reality Check

Artificial intelligence is becoming a strategic priority for retailers, with 80% of retail leaders planning to increase investment in the technology, according to EY’s latest CEO Outlook Survey. However, growing concerns over cybersecurity, customer privacy and regulation could complicate adoption across an industry already facing inflation, geopolitical uncertainty and changing consumer expectations.

Confidence In AI Comes With Risks

The survey found that 80% of retail leaders are confident in their ability to expand the responsible use of AI and customer data. Retailers are increasingly applying the technology to demand forecasting, inventory management, customer service and personalised marketing, seeking to improve efficiency and respond more quickly to market changes.

Yet adoption brings new vulnerabilities. EY found that 24% of retail leaders identified cybersecurity and data privacy as a leading business risk for the year ahead. Retailers manage sensitive customer information, payment systems and complex supply chains, making effective security and governance essential as AI becomes more deeply embedded in their operations.

The World Economic Forum’s Global Cybersecurity Outlook 2026 highlights the wider challenge: 87% of organisations reported rising cyber risks linked to AI vulnerabilities, while 94% expected malicious AI to have a significant impact on cybersecurity in 2026.

Regulation Will Shape AI Adoption

Regulatory frameworks are also influencing how quickly retailers can expand their use of AI. The European Union’s AI Act, China’s state-led governance model and measures introduced by individual US states are shaping the rules around the technology.

For retailers, compliance is becoming a strategic consideration, particularly for customer-facing applications that use personal data to personalise offers, automate interactions or analyse consumer behaviour. Regulatory missteps could carry significant costs in a sector where customer trust is critical.

EY Outlines Four Possible Futures

EY recommends that retailers plan for multiple outcomes rather than assume the current investment boom will continue uninterrupted. Its analysis draws on a four-scenario framework developed by Jim Dator of the University of Hawaii.

One scenario envisages constrained AI adoption as economic pressures, regulation, cyberattacks, legacy systems and poor data quality limit progress. Retailers in this environment may prioritise lower-risk back-office applications, such as finance, procurement, inventory and logistics, while customer-facing tools face resistance.

A second scenario anticipates continued growth, with sustained investment and widespread adoption. A third envisages deeper economic and social transformation as technology reshapes business operations. The fourth considers systemic breakdown, in which a small number of technology platforms control access to AI models and charge premium prices, potentially making advanced capabilities less accessible even to large retailers.

Governance Will Determine Competitive Advantage

EY’s findings suggest that investment alone will not determine which retailers benefit most from AI. Companies will also need robust cybersecurity, effective governance and strategies that can adapt to different economic, technological and regulatory conditions.

For a sector operating on tight margins, the challenge is to turn AI investment into lasting business value while managing the risks that come with greater dependence on the technology.

The Future Forbes Realty Global Properties
Aretilaw firm
eCredo
Uol

Become a Speaker

Become a Speaker

Become a Partner

Subscribe for our weekly newsletter