The International Monetary Fund (IMF) has downgraded its forecasts for Cyprus' economic growth, estimating that GDP growth in 2025 will slow to 2.5%, compared to previous projections of 3.1%. Additionally, for 2026, the IMF projects growth of 2.7%.

In contrast, the Ministry of Finance, in its 2025 budget, estimates the growth rate at 3.1% for 2025 and 3.2% for 2026.

In its April World Economic Outlook, the IMF says that the sharp increase in tariffs and the resulting uncertainty "will lead to a significant slowdown in global growth in the near term". As a result, the April projections, published on Tuesday, show a slowdown in growth across most advanced and emerging economies compared to the October projections.

According to the IMF’s new estimates, inflation in Cyprus is expected to remain at 2.3% in 2025, the same as in 2024, though higher than the October projection of 2%, before it is projected to ease to 2% in 2026.

Regarding the current account balance, the IMF appears more optimistic in its outlook for Cyprus, lowering its deficit projection to 7.3% of GDP for 2025, down from 8.3% in the October estimates.

The unemployment outlook has also improved. In its new projections, the IMF expects unemployment in Cyprus to fall further to 4.8% in 2025, down from the previously projected 5.1% in October, while for 2026, unemployment is expected to rise slightly to 5%.