1. Continued Moderate Growth, Though Slower Than Boom Years
   Growth will likely remain positive but will taper from the peaks. The economy may settle into a stable 2.5‑3.5 % growth band, depending on global conditions. Domestic demand and services will remain key drivers.
2. Strengthening of the Technology / ICT Sector
   ICT is already one of the fastest‑growing sectors. With government incentives, foreign investment, and favorable regulations, this sector will probably grow further. We may see more “tech hubs”, start‑ups, relocation of foreign tech firms, growth in fintech, cybersecurity, AI etc.
3. Tourism / Related Services Will Continue Important
   Cyprus’ tourism industry is resilient and a major contributor. Expect investments in upgrading infrastructure (hotels, airports, connectivity) plus possibly targeting niche tourism (luxury, eco, medical, wellness).
4. Real Estate & Construction with Mixed Outcomes
   Demand for housing (residential) might remain strong, especially in urban and coastal areas, driven by both locals and foreign investors. But risks include rising costs (materials, labor), environmental constraints, regulation, and competition. Potential growth in commercial real estate for offices / flex work, especially in tech / business services.
5. Improving Fiscal & Debt Indicators
   If projections hold, Cyprus should see lower relative public debt, maintained or improved budget surpluses, better credit ratings. This gives more fiscal space for public investment (in infrastructure, digitalization, green energy etc.).
6. Shift Towards Green Energy and Sustainability
   Cyprus has to follow EU mandates and climate goals. Expect more investment in renewable energy, energy interconnectors (to reduce energy isolation), upgrading infrastructure for efficiency, possibly subsidies / incentives in clean tech, solar, etc.
7. Increased Integration with EU / Foreign Markets & Investments
   Because Cyprus is an EU member, it can benefit from funds (Recovery & Resilience, EU cohesion, etc.). Also, foreign direct investment (FDI), especially from investors seeking favorable regulatory / tax environments, might increase. The “relocation” of certain functions (especially in ICT, back office, etc.) to Cyprus is possible.
8. Labour Market Tightness & Skilling Needs
   With lower unemployment and possibly increasing demand in high‑skill sectors (tech, services, green energy), there could be labour shortages or pressures. Upskilling, training, attracting foreign talent may become more central.

Key Risks & Challenges

No forecast is without risk. Some of the main threats that could hamper growth include:

• Global economic slowdown or trade disruptions (tariffs, supply chain issues).
• Energy price shocks, since Cyprus is somewhat dependent on energy imports (though renewables might help mitigate).
• Inflationary pressures especially wages, housing, and input costs (construction, materials).
• Regulatory / Environmental constraints: planning, environmental regulation, land use, permitting can slow down construction or infrastructure projects.
• Geopolitical risks: instability in the region could affect tourism, investment, trade.
• Competition from other jurisdictions: for tech / FDI, other countries may offer incentives, lowering Cyprus’s attractiveness unless Cyprus maintains its competitiveness.

By George Nolas

Business Implementation Director

Marketing Director