Cyprus: 2026 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Cyprus

The 2026 Article IV Consultation discusses that despite higher energy prices and lower tourism arrivals, Cyprus’s economy remains resilient, with strong growth and fundamentals. Tourism is also showing signs of softening. Fiscal performance has remained strong, with continued surpluses and public debt declining below 60 percent of gross domestic product. The financial sector is sound, with strong capital and liquidity buffers and improving asset quality. Growth is expected to moderate this year as higher energy prices and geopolitical tensions weigh on real incomes, tourism, and confidence. Inflation is projected to rise in the near term before easing. Risks are tilted to the downside, notably from a more prolonged war in the Middle East, tighter global financial conditions, and weaker external demand. Medium-term prospects are more balanced supported by strong fundamentals and reform momentum. Sustaining strong medium-term growth requires reforms to boost productivity and support investment, including by addressing skills mismatches and strengthening digital capabilities.