Nicosia, Cyprus. The International Monetary Fund forecasts Cyprus will record real GDP growth of 3.8% in 2025 and 3% in 2026, even as global economic risks intensify due to the war in the Middle East.
Cyprus outlook
The projections place Cyprus among the stronger performing economies, despite a broader slowdown expected across Europe and globally.
Global growth and uncertainty
The IMF said the global economy is entering a period of heightened uncertainty, with conflict-driven disruptions testing recent resilience. Global growth is forecast at 3.1% in 2026 and 3.2% in 2027, under the assumption that the conflict remains limited in scope and duration.
Downgraded forecast and inflation outlook
The updated forecast marks a downgrade from earlier expectations, reflecting the impact of rising energy prices and tighter financial conditions following the outbreak of war involving Iran. The IMF expects global inflation to rise to 4.4% in 2026, before easing to 3.7% in 2027.
Risks and oil price assumptions
The IMF said global growth could be derailed by the war in the Middle East as the conflict drives higher energy prices, and warned the outlook is subject to significant downside risks if the conflict intensifies or persists. In more adverse scenarios, it said global growth could slow to 2.5% or close to 2%, depending on the scale of energy market disruption. Under its baseline scenario, average oil prices are projected at $82 in 2026 and $75 in 2027, with relatively contained inflationary pressures.
How do the IMF’s projections for Cyprus compare with your expectations for the country’s economic outlook?