The Cyprus economy is forecast to grow next year despite the economic headwinds due to ongoing crises abroad, the finance minister said on Monday in presenting the state budget for 2027.

Makis Keravnos said GDP growth during the 2027-2029 period is projected at around 3 per cent on average, with inflation next year expected to decline to 2.5 per cent – down from 4.6 per cent overall for 2026.

The general government’s balance sheet will again post a surplus in 2027, hovering at around 3.9 per cent of GDP.

Meanwhile public debt as a percentage of GDP would continue falling next year.

Speaking to media after presenting the budget in parliament, Keravnos said the external environment is particularly adverse amid escalating armed conflicts – the wars in Ukraine and the Persian Gulf.

These conflicts have created a serious energy crisis, creating pressures on European economies and impacting individuals and businesses alike.

For this reason, he described the 2027 budget as “people-centred”, noting that the government plans more welfare spending as well as targeted measures to tackle the rising cost of living.

In remarks later, opposition Akel accused the government of forging an artificial picture of the state of the economy.

“Macro-economic indicators can neither be eaten nor can they fill up petrol tanks,” Akel MP Aristos Damianou said.

More later…