Cyprus leading economic index returns to marginal growth in August

Nicosia, Cyprus. Cyprus’ short-term economic outlook returned to marginal growth in August, according to the Composite Leading Economic Index compiled by the University of Cyprus Economics Research Centre. The index increased by 0.02 per cent year on year in August 2026, based on revised data, following declines in previous months.

Domestic indicators support index

The improvement was driven mainly by stronger domestic indicators, including property sales contracts, credit card transactions by Cypriots, retail sales volumes and temperature-adjusted electricity production.

These developments offset weaker external conditions, including Brent crude oil prices that remained significantly higher than a year earlier and lower tourist arrivals on a year-on-year basis.

The weighted Economic Sentiment Indicator also deteriorated compared with August 2025, limiting the overall improvement in the Composite Leading Economic Index.

External pressures remain

CypERC said the latest reading indicated signs of a gradual improvement in the short-term economic outlook, although pressures from the international economic and geopolitical environment continued.

Central bank growth projections

The findings come as the Central Bank of Cyprus expects the economy to slow in 2026 before recovering over the following two years.

The central bank projects gross domestic product growth of 2.9 per cent in 2026, compared with 3.8 per cent in 2025, followed by growth of 3.1 per cent in both 2027 and 2028.

The CBC raised its forecasts compared with June, increasing its 2026 projection by 0.4 percentage points and its 2027 forecast by 0.2 percentage points.

It said the revision for 2026 reflected stronger-than-expected economic momentum, particularly in the second quarter, as well as better tourism developments in recent months and strong residential investment.