Cyprus Economic Outlook Shows Marginal Growth in August Amid External Pressures
Cyprus’ short-term economic outlook returned to marginal growth in August 2026, with the Composite Leading Economic Index (CCLEI) indicating a slight year-on-year increase of 0.02 percent. This improvement was driven by stronger domestic indicators such as property sales, retail volumes, credit card transactions, and electricity production, offsetting negative external factors like higher Brent crude prices and reduced tourist arrivals.
Despite positive signs, economic sentiment weakened compared to August 2025, reflecting ongoing challenges from international economic and geopolitical conditions. The Central Bank of Cyprus (CBC) forecasts a slowdown in GDP growth to 2.9 percent in 2026 from 3.8 percent in 2025, followed by a rebound to 3.1 percent in both 2027 and 2028. Upgraded projections are based on robust tourism recovery, strong residential investment, and continued domestic demand.
However, net exports are expected to weigh on growth in 2026 due to reduced tourism revenue and higher imports, with improvements anticipated in subsequent years as tourism recovers. The economic outlook highlights resilience supported by internal activity and investment, though vulnerabilities remain, particularly related to energy prices and geopolitical uncertainties.
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