Cyprus economy set for 2.9 per cent growth in 2025, IMF reports

Finance Minister Makis Keravnos welcomed the International Monetary Fund’s (IMF) latest forecasts on Wednesday, saying they confirm both government projections and the continued strong performance and resilience of the Cypriot economy.

Speaking after a cabinet meeting at the Presidential Palace, Keravnos said he was pleased with the IMF’s October World Economic Outlook, which he described as conservative but still a clear endorsement of Cyprus’s economic direction.

“The IMF’s forecasts always tend to be much more conservative, even compared with our already cautious projections,” he said.

He stressed that the IMF remains one of the organisations closely monitoring developments in Cyprus following the financial crisis, while also assessing economic trends across Europe and the world.

The minister said the latest IMF projections demonstrate that the country’s fiscal discipline, stable growth, and resilience continue to pay off, even as the global economy faces uncertainty from trade tensions and weaker external demand.

Keravnos highlighted that the IMF now expects Cyprus’s GDP to grow by 2.9 per cent in 2025 and 2.8 per cent in 2026, higher than its previous estimates of 2.5 per cent and 2.7 per cent.

He said the fund also forecasts that inflation will ease sharply to 0.7 per cent in 2025, the lowest in the euro area, before rising slightly to 1.3 per cent in 2026.

“This is an even more favourable projection than ours,” he said.

The minister added that according to the IMF, unemployment is expected to remain low at around 4.5 per cent, while the fiscal balance should stay in surplus at roughly 3 per cent of GDP on average between 2025 and 2028.

“These IMF projections please us because they confirm our own forecasts and the ongoing healthy growth path and resilience of the Cypriot economy,” he said.

The IMF’s latest report also places Cyprus among the euro area’s more stable economies, underscoring that domestic demand and services continue to support growth despite global headwinds.

However, the current account deficit is expected to widen to 8.5 per cent of GDP in 2025 and 9.1 per cent in 2026, reflecting higher import growth linked to consumption and increased service activity.

Globally, the IMF predicts that world growth will slow slightly from 3.3 per cent in 2024 to 3.2 per cent in 2025 and 3.1 per cent in 2026, while growth in advanced economies will average 1.6 per cent in both years.