The Economic Sentiment Indicator for Cyprus rose by 0.2 points in June 2026 compared to May, driven by stronger confidence in retail trade, construction, and consumer outlook, according to the University of Cyprus Economics Research Centre. Despite gains in these sectors, business confidence in services declined, while manufacturing sentiment remained stable. Consumer confidence improved further, though recent financial assessments were less optimistic.

The survey highlighted a rise in economic uncertainty, mainly among the services and construction sectors, but uncertainty levels remain relatively low overall. This comes amid warnings from the International Monetary Fund (IMF) that Cyprus’s economic growth may slow due to elevated energy prices, regional tensions, and softer tourism demand. The IMF projects GDP growth to ease to 2.6% in 2026 from 3.8% in 2025 and inflation to rise to 3.5% this year before easing.

Despite these challenges, Cyprus maintains strong public finances with sustained budget surpluses and reduced public debt. The IMF also praised the country's fiscal management and financial sector resilience. Improvements in tax reforms and social security funding were noted as positive steps to bolster long-term economic stability amid a more demanding international environment.