The International Monetary Fund (IMF) has significantly revised upward its growth projections for Cyprus in its October 2025 World Economic Outlook.

According to the updated forecasts, Cyprus’s economy is expected to grow by 2.9% in 2025 and 2.8% in 2026, up from 2.5% and 2.7% respectively in the IMF’s April estimates.

The IMF now expects consumer prices in Cyprus to rise by only 0.7% in 2025, marking the lowest inflation rate in the entire euro area, before increasing slightly to 1.3% in 2026. This represents a sharp downward revision from the Fund’s April forecast of 2.3% for 2025 and 2% for 2026.

The updated figures suggest that inflationary pressures are well contained, supported by lower energy costs and a stable macroeconomic environment.

The unemployment rate is projected to fall to 4.5% in 2025, before inching up modestly to 4.7% in 2026, improving on earlier IMF expectations of 4.8% and 5%.

Cyprus is also expected to maintain a fiscal surplus averaging 3% of GDP over the 2025–2028 period, underscoring prudent financial management and post-crisis recovery strength.

However, the current account deficit is forecast to widen to -8.5% of GDP in 2025 and -9.1% in 2026, slightly higher than previous projections, due mainly to strong import growth tied to domestic investment and consumption.

Cyprus’s Minister of Finance, Makis Keravnos, welcomed the IMF’s latest assessment, noting that it confirms the government’s own forecasts and reflects the “continuing strength and resilience” of the Cypriot economy.

“These projections are particularly encouraging,” he said after Wednesday’s Cabinet meeting. “The IMF is known for its conservative estimates — often more cautious than our own — so their upgraded outlook reinforces confidence in Cyprus’s economic path.”

The Minister also underlined that the IMF projects global growth to slow modestly from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026, adding that Cyprus’s higher performance “stands out positively in a slowing international environment.”

Keravnos emphasized that both the IMF and the Cypriot government expect inflation to remain below 1% next year, followed by a slight increase to around 1.3% in 2026, describing this as “an even better outcome than our internal estimates.”

Despite external challenges, Cyprus continues to benefit from strong investment inflows, a resilient services sector, and solid fiscal fundamentals. The IMF’s latest projections reflect a broader confidence that the island’s economy is on track for steady, sustainable growth in the medium term.

“These IMF forecasts reassure us that Cyprus remains on a healthy and resilient path,” Keravnos concluded.