Newsroom
Cyprus’ economy may be growing, but many households could be forgiven for wondering where that growth has gone.
The latest forecast from the University of Cyprus’ Economics Research Centre, known as CypERC, expects the economy to expand by 2.7% in 2026. That is still growth, but it is a considerable slowdown from the estimated 3.8% recorded in 2025.
At the same time, inflation, the rate at which prices rise, is expected to jump from just 0.1% last year to 3% this year.
In plain language, Cyprus may be producing more, businesses may be earning more and employment may remain strong, but the cost of everyday life is also climbing.
And that is the figure people are more likely to notice when they fill a supermarket trolley, pay the electricity bill or look for somewhere affordable to rent.
A common misunderstanding is that low inflation means prices are falling. It does not. It simply means they are rising more slowly. When inflation increases again, already-high prices can climb even further.
CypERC said the economy remains in relatively good shape, helped by low unemployment, healthy government finances and an increase in new housing loans. It nevertheless lowered its 2026 growth forecast slightly, pointing to weaker economic activity during the first part of the year.
Other forecasts are even more cautious. The European Commission expects Cyprus’ economy to grow by 2.3% this year, while inflation could reach 3.6%, largely because of higher energy costs and the effects of the conflict in the Middle East. The commission warned that inflation would eat into households’ spending power, even as wages and the cost-of-living allowance provide some support.
Another warning sign comes from Cyprus’ growing trade deficit, the gap between what the country imports and what it exports.
Cyprus imported goods worth almost €7.3 billion during the first six months of 2026 but exported goods worth only €2.62 billion. That left a trade deficit of €4.68 billion, up 15.4% from the same period last year.
Imports increased by 8.8%, while exports fell by 1.2%, according to the Statistical Service.
For an island that depends heavily on imports, from fuel and cars to food, machinery, and raw materials, trouble abroad can quickly become a more expensive bill at home. Higher oil prices, shipping costs, or delays in international trade are eventually felt by businesses and consumers.
This helps explain the growing gap between the official picture and everyday experience. Economic growth measures the country’s overall activity; it does not show how evenly the benefits are shared or whether salaries are keeping pace with rent, groceries and energy bills.
So yes, Cyprus’ economy is still growing. But for a household trying to make one salary stretch from one payday to the next, growth on paper does not necessarily mean more money in the pocket.
