According to Eurostat, Cyprus' annual inflation rate is projected to rise to 4.2% in September, up from 3.1% in August.

In a related development, the Eurozone's annual inflation is anticipated to decline to 4.3% from a previous 5.2% recorded in August. Delving into the major contributors to the Eurozone's inflation, the food, alcohol, and tobacco sector recorded the highest annual inflation rate in September at 8.8%, a decrease from 9.7% in August. This was followed by the services sector at 4.7% (down from 5.5% in August), non-energy industrial goods at 4.2% (a drop from 4.7% in August), and energy, which saw a negative inflation of -4.7%, a decline from the -3.3% in August.

The credit rating agency, DBRS, has revised its 2023 growth forecast for the Cypriot economy upwards to 2.5%, up from an earlier projection of 2.1% made in June. However, the agency maintains its 2024 growth estimate steady at 2.4%.

Moreover, DBRS expects unemployment in Cyprus to remain at 6.8% in 2023 and predicts a slight decrease to 6.4% in 2024.

In addition, DBRS increased its 2023 growth estimates for several European countries, including Greece, France, Spain, Portugal, Slovakia, Slovenia, Denmark, Finland, Latvia, Lithuania, and Malta. In contrast, the agency reduced its growth forecast for the German economy, now expecting a deeper recession in 2023. The German economy is now projected to contract by 0.3%, compared to the earlier forecast of a 0.1% decline.

Lastly, DBRS anticipates that central banks in North America and Europe will maintain higher interest rates for much of 2024. Interest rates might begin to decline once again either late in 2024 or early 2025.