Economic growth rises in the fourth quarter of 2025

Cyprus maintains top-tier GDP growth in the EU: According to a flash estimate, GDP in Cyprus increased 4.5% in annual seasonally adjusted terms in Q4, following 3.6% growth in the previous quarter. Q4's reading was the strongest since Q4 2022 and was the second-highest in the EU, according to the latest Eurostat data. In seasonally adjusted quarter-on-quarter terms, GDP grew 1.4% in Q4, following a 0.9% expansion in the prior quarter. Accordingly, the full-year expansion was 3.8% in 2025, matching the prior two years’ average.

Robust tourism sector propels growth: Absent a detailed release, the Statistical Service noted that growth was supported by the domestic trade, information and communication and hospitality sectors. Cyprus’s economy remained robust and continued to outperform most of its regional peers despite global uncertainty, largely due to its resilient tourism sector. Tourist arrivals grew at the highest rate in two-and-a-half years in Q4 2025. Estimates of GDP components will be released by the Statistical Service on 2 March.

GDP growth to hit post-pandemic low this year: Looking to Q1 2026, our panelists expect annual GDP growth to slow to its lowest rate since Q4 2020, when the economy was still in the grip of the pandemic. Similarly, 2026 growth is seen slowing to a six-year low, dampened by decelerating private spending and exports. Rising price pressures and lower nominal wage growth will adversely affect household budgets, while weaker growth in the UK—the nation’s top source of tourism—should diminish that sector’s contribution to GDP growth.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Cypriot investment projections for the next ten years from a panel of 5 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable investment forecast available for Cypriot investment.

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