The International Monetary Fund (IMF) has downgraded its forecast for Cyprus’ economic growth in 2026 to 2.9%, from 3% in its previous projection, while upgrading its forecast for 2027 to 3.2%, from the previously estimated 3%.
At the same time, according to its October 2026 World Economic Outlook (WEO), published on Tuesday, the IMF expects inflation to reach 3.7% this year before falling to 1.9% in 2027.
In the draft 2027 state budget presented to Parliament by Finance Minister Makis Keravnos on 12 October, the Finance Ministry forecasts 3.1% growth in 2026 and 2.9% in 2027.
In its April 2026 World Economic Outlook, the IMF had forecast inflation of 2.6% for this year and just 1.6% for 2027.
Meanwhile, in its October 2026 World Economic Outlook, the IMF said it now expects the unemployment rate to fall to 4% in 2026, compared with the 4.6% forecast in April. For 2027, unemployment is projected to rise slightly to 4.4%, compared with the 4.7% estimated in April.
Regarding the current account deficit, the IMF is more optimistic, forecasting that it will narrow to 7.7% in 2026 and remain at the same level in 2027. This contrasts with its April 2026 projections, when it expected deficits to the tune of 9.3% in 2026 and 10.3% in 2027.
