Nicosia, Cyprus. The Central Bank of Cyprus said Cyprus’ GDP growth is expected to slow to 3.5% in 2025 from 3.9% in 2024, while remaining robust in the medium term. It forecast GDP growth of around 3% per year from 2026 to 2028.
Growth outlook and drivers
CBC governor Christodoulos Patsalides said the momentum of the Cypriot economy indicates strong foundations, adding that the country shows flexibility and adaptability in responding to external pressures. The central bank said the projected GDP path is mainly due to an expected further increase in domestic demand throughout the forecast horizon, and to a relatively lesser extent the expected path of external demand.
Public debt, unemployment and inflation
According to the CBC’s December economic bulletin, the public debt-to-GDP ratio fell to 56.2% in November 2025 from 65.8% in November 2024. The bulletin reported unemployment at 4.5%, while core inflation is projected to average 1.9% during 2025 to 2028.
Revisions to forecasts and risk assessment
Compared with the central bank’s September 2025 forecasts, GDP growth for 2025 was revised down by 0.2 percentage points, while no change is expected for 2026 to 2027. The CBC said the revision for 2025 is due to better-than-expected performance in the technology, trade and tourism sectors, as well as financial services, during the third quarter of the current year. Under the baseline scenario, the central bank expects balanced risks to GDP in 2025 and slightly downward risks for 2026 to 2028, while inflation risks are assessed as balanced in 2025 and slightly upward in 2026 to 2028.
How do you think changes in domestic demand will affect Cyprus’ growth outlook over the next three years?