Keravnos upbeat on Cyprus as IMF forecasts faster growth and lower inflation

The International Monetary Fund (IMF) raised its growth forecast for Cyprus to 3.2 per cent in 2027, a revision welcomed on Thursday by Finance Minister Makis Keravnos, who pointed to the economy’s resilience despite continuing international uncertainty. According to the IMF’s October 2026 World Economic Outlook, growth for this year has been revised slightly downwards, from 3 per cent to 2.9 per cent, reflecting the impact of ongoing conflicts. However, the Fund has raised its 2027 projection from 3 per cent to 3.2 per cent. The Finance Ministry, meanwhile, maintains its own 3.1 per cent growth forecast for 2026, supported by statistical service (Cystat) figures showing economic expansion of 3.2 per cent during the first half of the year. In a statement, Keravnos said the latest projections followed similar assessments by international and European institutions, which “emphatically confirm the resilience of the Cypriot economy” despite the pressures created by international developments. He added that, although the forecasts differed slightly, they continued to place Cyprus among the EU’s stronger-performing economies, reflecting what he described as prudent fiscal management, financial stability and the contribution of Cypriot businesses and workers. On inflation, the IMF expects consumer prices to rise by 3.7 per cent in 2026, largely because of the energy crisis, before inflation eases to 1.9 per cent in 2027. Keravnos said the projected slowdown reflected the government’s efforts to ease the cost-of-living burden through targeted support measures and policies aimed at increasing household incomes. The outlook for employment has also improved, with the IMF lowering its 2026 unemployment forecast to 4 per cent, from 4.6 per cent previously. Its estimate for 2027 has likewise been revised downwards, from 4.7 per cent to 4.4 per cent. According to the minister, the revisions reflect government policies that have helped Cyprus achieve conditions of full employment. Meanwhile, the Fund expects public debt to fall to 38.6 per cent of GDP by 2029, a development Keravnos described as “unprecedented and beneficial for the Cypriot economy”. The IMF also projects fiscal surpluses of 2.6 per cent of GDP in 2026 and 2.5 per cent in 2027, which the minister said would help maintain economic stability while allowing the government to respond to unexpected pressures and provide targeted support to vulnerable households. Keravnos concluded that “the government would continue pursuing a cautious fiscal policy, with the aim of strengthening economic credibility and creating the conditions for greater productivity, competitiveness and long-term resilience.”