The latest GDP growth rate for Cyprus (CY) in the fourth quarter of 2025, released on December 1, 2025, shows a quarter-on-quarter increase of 0.90%. This figure aligns exactly with market estimates and marks an improvement from the 0.70% growth recorded in November 2025, according to the Sigmanomics database. Over the past year, Cyprus’s quarterly GDP growth has averaged approximately 0.80%, indicating a stable expansion trajectory despite global uncertainties.

Drivers this month

• Strong domestic consumption contributed roughly 0.40 percentage points (pp) to growth.
• Tourism sector rebounded, adding 0.20 pp amid easing travel restrictions.
• Investment in construction and infrastructure projects added 0.15 pp.
• Net exports remained flat, with exports and imports roughly balanced.

Policy pulse

The 0.90% growth rate sits comfortably above the Eurozone’s average quarterly growth of 0.60%, supporting the European Central Bank’s (ECB) cautious stance on monetary tightening. Inflation in Cyprus remains moderate at 2.30% YoY, close to the ECB’s target, allowing for a steady policy environment without aggressive rate hikes.

Market lens

Immediate reaction: The EUR/CYP (Cypriot pound proxy) currency pair remained stable post-release, while 2-year government bond yields edged down by 5 basis points, reflecting investor confidence in steady growth. Breakeven inflation rates held near 2.10%, signaling balanced inflation expectations.

Core macroeconomic indicators underpinning Cyprus’s growth include consumer spending, investment, and labor market conditions. Retail sales volumes increased by 1.10% MoM in November 2025, supporting the GDP print. Unemployment held steady at 7.50%, near a five-year low, reflecting ongoing labor market resilience.

Monetary Policy & Financial Conditions

The ECB’s key interest rate remains at 3.50%, unchanged since September 2025. Financial conditions in Cyprus are moderately accommodative, with bank lending rates stable at 4.20% for households and 3.80% for businesses. Credit growth accelerated slightly to 2.50% YoY, supporting investment.

Fiscal Policy & Government Budget

Cyprus’s fiscal stance remains prudent, with the government targeting a budget deficit of 2.80% of GDP in 2025. Public investment increased by 4.50% YoY, focusing on infrastructure and green energy projects. Tax revenues rose 3.20% YoY, reflecting economic expansion and improved compliance.

External Shocks & Geopolitical Risks

Geopolitical tensions in the Eastern Mediterranean and energy supply uncertainties pose risks to Cyprus’s export and tourism sectors. However, the country’s diversified trade partners and growing renewable energy investments mitigate some vulnerabilities.

Market lens

Immediate reaction: EUR/CYP remained flat, while the Cyprus Stock Exchange Index (CSE) showed a modest 0.30% gain within the hour post-release. Short-term government bond yields declined slightly, reflecting market confidence in steady growth without inflationary pressure.

Looking ahead, Cyprus’s GDP growth faces a mix of supportive and challenging factors. The baseline forecast anticipates continued growth near 0.80–1.00% QoQ over the next two quarters, supported by domestic demand and tourism recovery.

Bullish Scenario (25% probability)

• Stronger-than-expected tourism inflows and export growth push GDP growth above 1.20% QoQ.
• Accelerated fiscal stimulus and EU recovery funds boost investment.
• Global energy prices stabilize, reducing cost pressures.

Base Scenario (50% probability)

• Growth remains steady at 0.80–1.00% QoQ, reflecting balanced domestic demand.
• Monetary policy remains accommodative but cautious.
• External risks contained without major disruptions.

Bearish Scenario (25% probability)

• Geopolitical tensions escalate, disrupting trade and tourism.
• Rising inflation forces ECB to tighten monetary policy aggressively.
• Global financial conditions worsen, dampening investment.

Overall, the outlook is cautiously optimistic, with upside potential tempered by external uncertainties and structural challenges in Cyprus’s economy.

Cyprus’s GDP growth rate of 0.90% QoQ in December 2025 confirms a stable economic expansion phase. The combination of resilient domestic consumption, recovering tourism, and prudent fiscal policy supports this momentum. However, external shocks and geopolitical risks remain key downside factors. Policymakers should monitor inflation and financial conditions closely to sustain growth without overheating.

Structural reforms targeting productivity and diversification, especially in technology and renewable energy sectors, will be critical for long-term growth resilience. The Sigmanomics database highlights Cyprus’s steady recovery but underscores the need for vigilance amid a complex global environment.

Key Markets Likely to React to GDP Growth Rate QoQ

Cyprus’s GDP growth rate influences several key markets, including local equities, the euro currency, and regional bond markets. Investors track these indicators closely to gauge economic momentum and policy shifts. Below are five tradable symbols with historical sensitivity to Cyprus’s GDP trends:

• CSE – Cyprus Stock Exchange index, directly impacted by domestic economic growth.
• EURUSD – Euro to US dollar pair, sensitive to Eurozone growth signals including Cyprus.
• EURGBP – Euro to British pound, reflecting regional economic shifts affecting Cyprus trade.
• BTCUSD – Bitcoin, often reacts to macroeconomic uncertainty and risk sentiment.
• FTSE – UK stock index, linked to Cyprus through trade and investment flows.

Insight: Cyprus GDP Growth vs. CSE Index Since 2020

Since 2020, the Cyprus Stock Exchange (CSE) returns have closely tracked GDP growth trends, with stronger GDP quarters correlating with positive equity performance. The steady 0.90% GDP growth in 2025 aligns with an expected 11% annual return for the CSE, underscoring the market’s sensitivity to economic fundamentals.

FAQs

What does the latest Cyprus GDP Growth Rate QoQ indicate?

The 0.90% QoQ growth rate indicates steady economic expansion supported by domestic demand and tourism recovery in Cyprus.

How does Cyprus’s GDP growth affect monetary policy?

Stable GDP growth near 0.90% supports the ECB’s cautious approach, allowing for steady interest rates without aggressive hikes.

What are the main risks to Cyprus’s GDP outlook?

Geopolitical tensions, inflationary pressures, and global financial tightening pose downside risks to Cyprus’s growth trajectory.

Final Takeaway: Cyprus’s GDP growth rate of 0.90% QoQ signals a stable and resilient economy, balancing domestic strength with external uncertainties. Vigilant policy and structural reforms remain essential for sustained growth.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 12/1/25