Nicosia: The GDP growth rate for Cyprus is projected to reach 3.5% in 2025, according to the Central Bank of Cyprus (CBC). This projection follows a revised rate of 3.9% for 2024, with further annual growth of 3% anticipated for the period of 2026-28.
According to Cyprus News Agency, the CBC released its December 2025 forecasts on Monday, outlining key macroeconomic indicators for Cyprus, including GDP, unemployment, and inflation. The report also analyzes potential deviations from the baseline scenario for GDP and inflation forecasts.
The CBC attributes the projected GDP growth to an expected increase in domestic demand, supported by a rise in private consumption and household income, as well as the resilience of the labor market. The labor market is forecasted to lower unemployment to 4.5% in 2025, down from 4.9% in 2024. This trend is consistent with positive employment expectations noted in the European Commission's Economic Surveys and a continued decline in registered unemployment.
Inflation, measured by the Harmonized Index of Consumer Prices (HICP), is expected to decrease to 0.8% in 2025 from 2.3% in 2024. The CBC explains this decline is due to deflationary pressures on non-energy industrial and energy prices, along with a slowdown in food price increases. The euro's appreciation against the US dollar and trade diversions of cheaper Chinese imports to the EU are contributing factors. Inflation is projected to rise to 1.7% in 2026, 2.2% in 2027, and 1.9% in 2028, influenced by expected increases in food prices and a gradual reduction in deflationary pressures on energy and industrial goods prices.