Cyprus: Economic growth is stable in the third quarter of 2025
Cyprus becomes second-fastest-growing euro area economy: Cyprus’ GDP expanded 3.6% on a year-on-year basis in Q3, unchanged from the previous quarter’s reading and a flash estimate published in mid-November. This made Cyprus the fastest-growing economy in the EU in Q3, after Ireland, where GDP growth is inflated by multinationals.
On a working-day and seasonally adjusted quarter-on-quarter basis, the economy expanded 0.9% in Q3, following 0.7% growth in the previous quarter.
Private consumption and exports accelerate: Compared to the previous period’s data, figures in Q3 improved for private consumption (+5.4% on a year-on-year basis vs +2.9% in Q2), exports of goods and services (+6.7% vs +0.4% in Q2) and imports of goods and services (+8.0% vs +0.8% in Q2). In contrast, readings softened for government consumption (+2.5% vs +6.8% in Q2) and fixed investment (-2.6% vs +10.6% in Q2).
GDP growth to be the second-fastest in euro area in 2026: Our Consensus is for GDP growth to slow in 2026 from 2025’s projected level amid weaker expansions in private consumption and exports. However, strong tourism—which accounts for around 15–20% of employment and GDP, directly and indirectly—and an investment boost from Next Generation EU funds should allow Cyprus to maintain its current position as the euro area’s second-fastest growing economy. The health of the EU and UK economies—both key sources of tourist arrivals—is a key factor to watch.