The University of Cyprus Economic Research Centre (ERC) has upgraded its projection for Cyprus’ economic growth rate in 2024 by 0.5 percentage points to 3.5%, citing strengthened growth momentum in the first half of the year and favourable domestic economic conditions in the third quarter of the year.

The ERC miaintained its projection for 2025 unchanged at 3.3%.

“Growth in Cyprus is projected to accelerate in 2024 and to remain robust in 2025, supported by favourable labour market conditions, the return of inflation to around-target rates, and gradual declines in interest rates,” the ERC said in its October Economic Outlook.

Moreover, the ERC noted that monthly data, such as card purchases, tourist arrivals, property sale contracts, registrations of new companies and registrations of motor vehicles, “suggest that economic activity growth in Cyprus remained firm in the third quarter of 2024,” while the number of registered unemployed continued to decline at double-digit rates during the third quarter, and the unemployment rate (according to Eurostat) stayed at relatively low levels in July and August, despite an uptick recorded in July.

According to the ERC, the main risks to the outlook for growth and inflation stem from the external economic environment, (particularly the growth momentum in trading partner economies), the pace of monetary policy easing, especially the path of domestic borrowing costs, as well as from geopolitical tensions, cyberattacks and climate risks.

It also underlines that “fiscal risks owing to pending infrastructure projects and incomplete reforms could lead to lower-than-projected growth. On the other hand, a stronger reform drive, new investments, and targeted measures to address cost-of-living pressures may result in better-than-forecast growth rates.”