Cyprus GDP growth at 3.7% in 2024, above 3% for 2025-26

Real GDP growth in Cyprus is estimated to have accelerated from 2.6% in 2023 to 3.7% in 2024, according to a University of Cyprus report.

Growth is projected to moderate to 3.3% in 2025 and to 3.0% in 2026, the university’s Economics Research Centre said in its January Economic Outlook.

It added that the growth outlook is supported by the recent strong economic momentum and disinflation in Cyprus, as well as by robust labour markets and monetary policy easing in the euro area.

Compared to the October issue, the 2024 growth forecast has been revised up by 0.2 percentage points, because of higher-than-expected growth in the third quarter and further improvements in domestic activity and the job market, reflected in data for the last months of 2024, the ERC report said.

The growth forecast for 2025 has remained unchanged.

Inflation (based on the Consumer Price Index) decelerated to 1.8% in 2024 and is expected to remain at similar levels in 2025 and 2026. Inflation is projected at 1.7% in 2025, down by 0.4 percentage points compared to the October issue, as inflation surprised on the downside in the fourth quarter of 2024.

In 2026, inflation is forecast at 1.6%. The inflation outlook is influenced by the recent declines in international oil prices, the deceleration of inflation in the second half of 2024, the still restrictive financing conditions in Cyprus, and easing selling price expectations, particularly in services.

Risks to the growth outlook are tilted to the downside, while risks to the inflation outlook are skewed to the upside, especially as uncertainties about international trade policies have increased and geopolitical risks have persisted.