Real GDP growth up 0.2% for 2024, 2025 forecast at 3.3%, 3% for 2026 says CypERC

Real GDP growth in Cyprus is estimated to have gained momentum in 2024, strengthening to 3.7%, according to the Economic Outlook of the Economics Research Centre (CypERC) of the University of Cyprus, which has revised it by 0.2%, compared to the October issue.

Growth is expected to moderate but remain robust in 2025 and 2026, forecasted at 3.3% in 2025 and at 3% in 2026.

In a press release, it is noted that the 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. The 0.2% revision was a result of stronger than expected growth in the third quarter of 2024, as well as the fact that domestic monthly indicators continued to reflect positive developments in the fourth quarter.

Forecasts by other organisations also suggest that growth in 2025 and 2026 is expected to moderate, following a strong economic momentum in 2024. Real GDP growth in Cyprus for 2024 is estimated at 3.7% and 3.6% by the Central Bank and the European Commission, respectively. In 2025, growth is projected to decelerate to 3.0% and 2.8% according to the Central Bank and the European Commission, respectively. For 2026, the Central Bank’s growth forecast points to a slight pickup (3.1%), while the Commission’s forecast indicates a further slowdown (2.5%).

CPI inflation is forecast at 1.7% in 2025, down by 0.4% compared to the October issue, as inflation surprised on the downside in the fourth quarter of 2024. In 2026, inflation is projected 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.

According to CypERC, 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.

(Source: CNA)