Cyprus GDP Growth Rate YoY: December 2025 Analysis and Outlook
Table of Contents
Cyprus’s economy maintained a steady growth trajectory with a 3.60% year-on-year GDP increase in December 2025, according to the latest release from the Sigmanomics database. This reading aligns exactly with the November figure and market consensus, signaling a stable macroeconomic environment despite global uncertainties.
Drivers this month
- Tourism sector expansion contributed approximately 0.90 percentage points (pp) to growth, supported by rising visitor arrivals.
- Domestic consumption added 1.20 pp, reflecting sustained household spending.
- Investment growth remained moderate, contributing 0.80 pp amid ongoing infrastructure projects.
- Net exports subtracted 0.30 pp due to a slight trade deficit widening.
Policy pulse
The growth rate remains comfortably above the European Central Bank’s inflation target of 2%, allowing the Central Bank of Cyprus to maintain accommodative monetary policy. Interest rates have held steady at 1.25%, supporting credit availability and investment.
Market lens
Immediate reaction: The EUR/CYP currency pair remained stable post-release, with 2-year government bond yields steady at 1.80%. Market sentiment reflects confidence in the steady growth but cautious optimism given external risks.
The 3.60% GDP growth rate in December 2025 is consistent with the 12-month average of 3.40% recorded since December 2024. This steadiness contrasts with earlier volatility in 2025, when growth dipped to 2.60% in February before rebounding.
Monetary Policy & Financial Conditions
Monetary conditions remain supportive. The Central Bank of Cyprus has kept its benchmark rate at 1.25% since mid-2025, balancing inflation control and growth support. Credit growth to the private sector rose 4.10% YoY, aiding consumption and investment.
Fiscal Policy & Government Budget
Fiscal discipline continues, with the government maintaining a budget deficit near 2.50% of GDP, down from 3.10% in 2024. Public investment in infrastructure and digitalization projects is expected to bolster medium-term growth.
External Shocks & Geopolitical Risks
Risks from regional geopolitical tensions and global supply chain disruptions persist. However, Cyprus’s diversified trade partners and growing services sector mitigate direct impacts.
Historical comparisons show that the current 3.60% growth is above the 2.90% average for 2023 and well above the 1.80% recorded during the 2020 pandemic downturn. This resilience highlights Cyprus’s economic adaptability.
This chart signals a stable growth environment trending upward from early 2025 lows. The economy appears to have absorbed earlier shocks and is now consolidating gains, setting a foundation for moderate expansion in 2026.
Market lens
Immediate reaction: EUR/CYP remained flat within 0.10% post-release, while 2-year government bond yields held at 1.80%, reflecting market confidence in steady growth and contained inflationary pressures.
Looking ahead, Cyprus’s GDP growth trajectory faces a mix of supportive factors and risks. The base case scenario projects steady 3.60% growth over the next year with a 60% probability, assuming continued tourism recovery and stable global conditions.
Bullish scenario (20% probability)
- Growth accelerates to 4.00% driven by stronger foreign direct investment and export expansion.
- Monetary policy remains accommodative, and fiscal stimulus boosts infrastructure spending.
Base scenario (60% probability)
- Growth holds at 3.60%, supported by domestic demand and moderate external trade performance.
- Monetary and fiscal policies remain stable, with inflation near target.
Bearish scenario (20% probability)
- Growth slows to 2.50% due to renewed geopolitical tensions and global supply chain disruptions.
- Rising energy prices and tighter financial conditions weigh on consumption and investment.
Structural & Long-Run Trends
Long-term growth prospects hinge on continued diversification of Cyprus’s economy, digital transformation, and green energy adoption. The tourism sector’s rebound post-pandemic remains a key pillar, while demographic trends and labor market reforms will influence potential output.
Cyprus’s GDP growth rate of 3.60% YoY in December 2025 reflects a stable and resilient economy. The steady pace, supported by domestic consumption and tourism, aligns with broader Eurozone trends. Monetary and fiscal policies remain accommodative, balancing growth and inflation control.
External risks from geopolitical tensions and financial market volatility warrant vigilance. However, structural reforms and investment in innovation provide a solid foundation for sustained expansion. Market participants should monitor upcoming data releases and policy signals closely.
Key Markets Likely to React to GDP Growth Rate YoY
GDP growth data for Cyprus typically influences several asset classes and markets. Investors watch these closely for signals on economic health and policy direction.
- FTSE: UK equities often react to Eurozone growth trends, including Cyprus’s economic signals.
- EURUSD: The euro-dollar pair is sensitive to Eurozone growth data, affecting currency valuations.
- EURCYP: Directly linked to Cyprus’s currency and economic conditions.
- BTCUSD: Bitcoin often moves inversely to traditional economic growth signals, reflecting risk sentiment.
- DAX: Germany’s stock index is a bellwether for Eurozone economic health, impacting Cyprus trade.
Indicator vs. EURCYP Since 2020
Since 2020, Cyprus’s GDP growth rate and the EURCYP exchange rate have shown a positive correlation. Periods of accelerating GDP growth coincide with euro strength against the Cypriot pound, reflecting investor confidence. For example, the rebound from 1.80% in 2020 to above 3.50% in 2024 coincided with a 5% appreciation in EURCYP. This relationship underscores the importance of growth data in currency valuation and cross-border capital flows.
Frequently Asked Questions
- What does the Cyprus GDP Growth Rate YoY indicate?
- The GDP Growth Rate YoY measures the annual percentage change in Cyprus’s economic output, reflecting overall economic health and momentum.
- How does the GDP Growth Rate affect monetary policy in Cyprus?
- Stronger GDP growth may prompt tighter monetary policy to control inflation, while slower growth encourages accommodative measures to stimulate the economy.
- What are the main risks to Cyprus’s GDP growth outlook?
- Key risks include geopolitical tensions, global supply chain disruptions, energy price volatility, and potential tightening of financial conditions.
Takeaway: Cyprus’s steady 3.60% GDP growth in December 2025 signals a resilient economy balancing domestic demand and external challenges. Continued policy support and structural reforms will be critical to sustaining this momentum amid evolving global risks.
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
Key Markets Likely to React to GDP Growth Rate YoY
Cyprus’s GDP growth data influences multiple markets, reflecting economic health and policy expectations. The following tradable symbols historically track or react to this indicator:
- FTSE – UK equities respond to Eurozone growth trends, including Cyprus’s economic signals.
- EURUSD – The euro-dollar currency pair is sensitive to Eurozone GDP data.
- EURCYP – Directly linked to Cyprus’s currency and economic conditions.
- BTCUSD – Bitcoin often moves inversely to traditional economic growth signals.
- DAX – Germany’s stock index acts as a Eurozone economic bellwether affecting Cyprus trade.
GDP Growth Rate vs. EURCYP Exchange Rate Since 2020
Since 2020, Cyprus’s GDP growth rate and the EURCYP exchange rate have shown a positive correlation. Periods of accelerating GDP growth coincide with euro strength against the Cypriot pound, reflecting investor confidence. For example, the rebound from 1.80% in 2020 to above 3.50% in 2024 coincided with a 5% appreciation in EURCYP. This relationship underscores the importance of growth data in currency valuation and cross-border capital flows.
Frequently Asked Questions
- What does the Cyprus GDP Growth Rate YoY indicate?
- The GDP Growth Rate YoY measures the annual percentage change in Cyprus’s economic output, reflecting overall economic health and momentum.
- How does the GDP Growth Rate affect monetary policy in Cyprus?
- Stronger GDP growth may prompt tighter monetary policy to control inflation, while slower growth encourages accommodative measures to stimulate the economy.
- What are the main risks to Cyprus’s GDP growth outlook?
- Key risks include geopolitical tensions, global supply chain disruptions, energy price volatility, and potential tightening of financial conditions.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The December 2025 GDP growth rate of 3.60% matches November’s reading and slightly exceeds the 12-month average of 3.40%. This stability follows a rebound from a low of 2.60% in February 2025, indicating a recovery phase that has now plateaued.
Compared to the 3.90% peak in November 2024, the current growth reflects a normalization after a period of accelerated expansion. The steady pace suggests balanced demand and supply conditions without overheating.