The International Monetary Fund (IMF) has upgraded its growth forecast for Cyprus, raising the 2024 projection from 2.7% (April estimate) to 3.3%, according to the October 2024 World Economic Outlook (WEO). For 2025, growth is also expected to increase to 3.1%, up from 2.9%. This places Cyprus among the top economies in the eurozone, with only Malta and Croatia expected to post higher growth rates at 5% and 3.4%, respectively. Cyprus’ Finance Ministry is even more optimistic, estimating 3.7% growth for 2024.
Inflation in Cyprus is forecasted to ease, with the IMF projecting a slight decrease to 2.2% in 2024 and 2% in 2025. This represents an improvement from the previous forecast of 2.3% for 2024. Unemployment is also expected to drop, with figures predicted to fall to 5.3% in 2024 (down from April’s 5.9% projection) and further to 5.1% in 2025.
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On a less positive note, Cyprus’ current account deficit is expected to widen. The IMF predicts a deficit of -10.1% of GDP in 2024, compared to the -8.6% previously estimated, and -8.6% in 2025. The Cypriot government, however, has a more conservative forecast of -8.5% for 2024 and -7.6% for 2025.
Globally, the IMF forecasts steady growth of 3.2% for 2024 and 2025, with notable upgrades for the U.S. economy. U.S. growth is now expected to reach 2.8% in 2024, up from 2.7%, and 2.2% in 2025, revised from 1.9%. In contrast, Germany’s growth outlook has been downgraded, with zero growth expected in 2024, down from 0.2%, and a modest recovery to 0.8% in 2025.
This report highlights Cyprus’ strong economic recovery, buoyed by strategic fiscal policies, even as other global economies face slower growth.
