EU Gives Cyprus ...
EU Gives Cyprus a Vote of Confidence — But Is the Boom Sustainable?
On 17 November 2025, the European Commission released its Autumn Economic Forecast, painting a very bullish picture for Cyprus’s economy. According to the forecasts, Cyprus is projected to grow by 3.4% in GDP for 2025, significantly outpacing many EU peers.
This growth is primarily driven by domestic demand, investment, and service sector exports , especially tourism and ICT.
The report also highlights very low inflation: headline inflation is expected to be just 0.9% in 2025, before gradually rising to about 1.9% by 2027.
Unemployment is similarly tight: the forecast sees it at a historically low 4.3%.
On the public finance side, Cyprus is in surprisingly good shape: it's running a strong primary surplus, and public debt is projected to decline over the next few years.
Cyprus’s Finance Ministry welcomed this forecast, with the Minister calling it a “vote of confidence” in the government's economic policies.
Economy Today
Meanwhile, analysts note that while household consumption remains a key driver, its momentum may cool somewhat as real wage growth slows and foreign labor inflows ease.
This upbeat forecast is very encouraging. For a small island economy, achieving 3.4% growth in 2025 is no small feat , and it suggests that Cyprus’s economic model is working, at least for now. The strong performance of service exports, especially tourism and ICT, indicates the country is successfully diversifying beyond traditional dependency on beach tourism.
However, risks lie ahead. The forecast hinges on continued domestic demand and investment, which can be fragile. If consumption slows or investments underperform, growth could falter. Moreover, while low inflation is a net positive, a rebound toward 1.9% by 2027 could squeeze household finances, especially if wage growth doesn’t keep up.
Public finances look healthy, but maintaining fiscal discipline will be key. Cyprus must avoid tempting policy loosening, especially as growth strengthens. With historically low unemployment, the next challenge is sustaining job creation without overheating.
Overall, though, this is a strong moment for Cyprus. The Commission’s forecast gives the government and investors solid ground to build on , but long-term stability will require vigilance, smart policy, and a careful balancing of growth drivers.
Market Cyprus - News Service
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