By Dorita Yiannakou and Panayiotis Rougalas
Cyprus has been recording economic growth rates in recent years that would make even some of Europe’s strongest economies take notice.
Key economic indicators continue to show strong performance, a trend also reflected in positive assessments from international credit rating agencies and in the growing number of foreign companies choosing to base their operations on the island.
But alongside the success story, a more complicated picture is emerging, one that raises questions about how evenly that growth is actually being felt across society.
While the economy expands at a steady pace, a significant share of citizens appear to be falling behind, with the benefits of growth not reaching all social groups equally. In other words, the speed of economic progress is not automatically translating into a better standard of living for everyone.
A large part of Cyprus’ GDP is generated by foreign companies in sectors such as ICT, shipping and investment funds that have relocated their headquarters to the island.
Even President Nikos Christodoulides has acknowledged in recent interviews that many citizens feel disconnected from the country’s economic success, stressing the need for growth to be more visible in people’s daily lives.
A study by IMR / University of Nicosia highlights this disconnect, finding that nearly four in ten people fall into the lowest levels of financial well-being, while one in two report experiencing financial stress. At the same time, Cyprus’ at-risk-of-poverty rate rose to 14.9% in 2025, up from 14.6% the previous year, affecting around 146,000 people.
A growing gap
Much of the country’s wealth is concentrated in real estate, large development projects, and professional services such as legal and accounting firms, sectors that tend to benefit a relatively small economic elite.
Salary data reflects this uneven picture. While average wages have increased by around 21% since 2021, the gains have not been evenly distributed across industries or regions.
In some sectors, such as information services, salaries have surged by nearly 100% in four years, reaching close to €5,000 a month. In financial-related services, average monthly pay has also climbed above €5,000 after significant increases.
At the same time, certain groups — including parts of the public sector — enjoy benefits and protections, such as cost-of-living adjustments and pension schemes, which are not widely available in the private sector.
As a result, income inequality in Cyprus continues to edge higher, with the Gini coefficient reaching 31.2%, above the EU average of 29.4%.
Housing under pressure
Nowhere is the “two-speed Cyprus” more visible than in housing.
The president himself has described the housing crisis as the biggest challenge facing his government. Rising construction costs after the pandemic, strong demand in areas such as Limassol, increased development activity, and the global rise of short-term rentals have all pushed property prices higher.
According to the Central Bank of Cyprus, house prices rose by 7.5% year-on-year in early 2026, with apartment prices accelerating by 10.8%.
The real issue, however, lies in the widening gap between property prices and incomes. Cyprus has seen this ratio increase, while the EU overall has recorded a decline.
For many households renting on the open market, housing costs now consume between 40% and 50% of monthly income, leaving little room for other essentials.
Strong numbers, mixed reality
The Central Bank projects GDP growth of 2.5% in 2026, slightly lower than 3.8% in 2025, with a gradual recovery expected in the following years. Unemployment is expected to edge up slightly but remain low by European standards, while inflation is projected to rise again due to external pressures linked to geopolitical tensions.
Public debt has fallen significantly, dropping below 60% of GDP for the first time in 15 years — a milestone that strengthens the country’s fiscal position.
The cost of living reality
Despite the strong macroeconomic figures, everyday expenses continue to weigh heavily on households.
Prices for basic goods such as dairy products and oils remain higher than the EU average, according to Eurostat data, while other categories such as meat and vegetables are cheaper or broadly in line with European levels.
Energy costs also remain a major burden. Although Cyprus benefits from strong solar potential, it remains the only EU country without energy interconnection, relying heavily on imported fuels and carbon-related costs that are passed on to consumers.
When adjusted for purchasing power, electricity prices in Cyprus rise above the EU average, adding further pressure on households and businesses.
Pensions and social safety
Concerns are also growing about financial security in retirement. Nearly half of Cypriots say they doubt they will be able to maintain their current standard of living after retirement.
At the same time, Cyprus has one of the highest rates of elderly poverty in Europe. Among those aged over 65, around four in ten are considered financially vulnerable.
While the overall poverty risk rate in Cyprus is lower than the EU average, the figures worsen significantly among pensioners.
A “two-speed” economy
The overall picture points to a country with strong economic fundamentals but uneven social outcomes.
Cyprus continues to attract investment, grow its economy, and reduce public debt. But for many households, rising costs in housing, energy, and basic goods are making it harder to feel that growth in everyday life.
The question now being raised, quietly but increasingly often, is whether Cyprus’ economic model is amplifying inequality, benefiting investment and high-growth sectors, while struggling to deliver the same gains to ordinary households through wages, social policy, and affordable living conditions.
For many citizens, the numbers may look impressive on paper. The lived reality, however, tells a more complicated story.
