IMF upgrades Cyprus’ growth forecast

The International Monetary Fund (IMF) has revised its growth forecast for Cyprus in 2024, upgrading it to 3.3%, a notable improvement from its earlier projection of 2.7% in April.

The latest forecast, included in the IMF’s October World Economic Outlook (WEO) that was released on Tuesday, also anticipates a growth rate of 3.1% for 2025, up from the previously expected 2.9%.

This revision places Cyprus among the top-performing economies in the Eurozone, with the country projected to have the third-highest growth rate in 2024. Malta is forecast to lead with a 5% growth rate, followed by Croatia at 3.4%. The Cypriot Finance Ministry is even more optimistic, projecting a 3.7% growth rate for 2024, in its national budget estimates.

According to the WEO, Cyprus’ inflation is expected to ease slightly to 2.2% in 2024 and 2% in 2025. The IMF’s April forecast, estimated inflation at 2.3% for 2024. Additionally, unemployment in Cyprus is expected to fall to 5.3% in 2024, down from the 5.9% projected in April, and further decrease to 5.1% in 2025.

However, the IMF offered a more cautious outlook for Cyprus’ current account deficit, projecting it at -10.1% of GDP in 2024 and -8.6% in 2025. These figures represent a deterioration from April's estimates of -8.6% and -8.5%, respectively. In contrast, the Cypriot government anticipates a more modest deficit of -8.5% for 2024 and -7.6% for 2025.

On the global stage, the IMF continues to forecast modest growth, projecting a steady 3.2% for both 2024 and 2025. Although the headline figures remain unchanged, there are key adjustments beneath the surface. The forecast for U.S. growth has been upgraded to 2.8% in 2024, up from 2.7%, and to 2.2% for 2025, up from 1.9% in April. Meanwhile, growth prospects for major European economies, notably Germany, have been downgraded. Germany is now expected to experience zero growth in 2024, down from the previously projected 0.2%, with a slight recovery to 0.8% in 2025, down from 1.3% projected in April.