Cyprus Economic Outlook: Growth Projections and Inflation Trends - January 2025
The University of Cyprus Economic Research Center reports a positive trajectory for Cyprus's economy, with real GDP growth estimated to rise from 2.6% in 2023 to 3.7% in 2024. However, growth is expected to moderate slightly to 3.3% in 2025 and further to 3.0% in 2026.
This optimistic outlook is bolstered by strong economic momentum, a trend of disinflation, robust labor markets, and recent monetary policy easing in the euro area. Notably, the growth forecast for 2024 has been revised upward by 0.2 percentage points, reflecting higher-than-anticipated growth in the third quarter and improvements in domestic activities and the job market toward the end of 2024.
Inflation, measured by the Consumer Price Index, decelerated to 1.8% in 2024 and is expected to stabilize around similar levels in the following years, with projections of 1.7% in 2025 and 1.6% in 2026. This downward trend in inflation can be attributed to several factors, including declines in international oil prices and easing selling price expectations, particularly in the services sector.
Despite these positive indicators, the report highlights that risks to the growth outlook remain on the downside, while inflation risks are skewed to the upside. Increased uncertainties surrounding international trade policies and ongoing geopolitical tensions could pose challenges ahead.
For more detailed insights, please refer to the full report from the University of Cyprus Economic Research Center
(https://www.ucy.ac.cy/erc/wp-content/uploads/sites/125/2025/01/Economic_Outlook_01_2025.pdf)