The International Monetary Fund’s (IMF) forecast for the Cypriot economy, presented in its October 2026 World Economic Outlook, is particularly encouraging, Finance Minister Makis Keravnos said in a written statement on Thursday.
The Minister noted that the IMF forecast follows a series of other projections by international and European organisations, “which emphatically confirm the resilience of the Cypriot economy in an environment of heightened uncertainty directly affected by armed conflicts.”
According to the IMF forecast, Cyprus’ economic growth rate for 2026 remains high, despite the Fund marginally revising its projection downwards from 3% to 2.9% due to the impact of armed conflicts. At the same time, it upgraded its growth forecast for 2027 to 3.2%, from its previous estimate of 3%.
As noted in the written statement, the Finance Ministry’s corresponding growth forecast for 2026 remains at 3.1%, based on the Statistical Service’s half-year results, which record a growth rate of 3.2%.
“Growth forecasts, despite minor differences between them, retain Cyprus among the European Union’s top performers and confirm the sound economic policy pursued by the government of President Nikos Christodoulides, which is based on prudent fiscal management, the stability of the financial system, strengthening investor confidence and, above all, the dynamism of Cypriot businesses and workers,” Keravnos said.
Regarding inflation, which is being driven mainly by the energy crisis, the IMF estimates that it will reach 3.7% in 2026 before falling to 1.9% in 2027. According to the Minister, this fully confirms that the government’s coordinated and targeted efforts, through support packages to mitigate the impact of rising prices and its broader efforts to increase citizens’ incomes, are helping to gradually ease inflationary pressures in the coming years.
According to Keravnos, the IMF forecast is also very encouraging regarding unemployment. The Fund projects that the rate will fall from 4.6% to 4% in 2026 and from 4.7% to 4.4% in 2027, “confirming the government’s rational policies, which have enabled Cyprus’ economy to operate today, and in the future, under conditions of full employment, in contrast to what prevailed in the recent past.”
The Minister also welcomed the IMF forecast for a continued decline in public debt, which the Fund projects at 38.6% by 2029. Keravnos described this as “a significant development that will be unprecedented and beneficial for the Cypriot economy.”
Finally, the IMF forecast of a budget surplus equivalent to 2.6% of GDP in 2026 and 2.5% in 2027 demonstrates, according to the Minister, the sound fiscal policy pursued by the government. The creation of surpluses provides economic stability and the necessary flexibility to address emergencies, as well as to implement sound social policies and provide targeted support to vulnerable groups.
“As a government and as the Finance Ministry, we will remain firmly committed to the careful and preventive fiscal policy we are pursuing. Based on the data and all forecasts by international organisations, this policy strengthens the credibility of our economy and creates the conditions for a more productive, more competitive and more resilient economy operating at full employment, for the benefit of citizens,” he concluded.
