Morningstar DBRS has upgraded its forecast for Cyprus’ economic growth in 2026 to 3% from 2.9% expected last December, before slowing down to 2.6% for 2027.
In its baseline scenario for the Cypriot economy, the Canada-based rating agency said on Friday it projects growth to expand slightly faster this year, and has raised its forecast for next year, too, against a 2.4% projection for 2027 issued last December. The state budget provides for GDP growth of 3.1% this year and 3% in 2027.
Regarding unemployment in Cyprus, DBRS expects the rate to rise to 4.5% in 2026, a percentage that will remain in 2027, up from 4.3% expected last December.
DBRS further commented on the global economy that the ultimate impact of the US-Israeli war with Iran on growth and inflation remains unknown and expects “moderate deterioration in the outlook in the coming months, particularly if the conflict causes persistent oil and gas shortages.”
It also said that with only a few exceptions, the outlook for 2026 and 2027 remains broadly unchanged from what it expected last December. If energy supply shortages are prolonged, they could lead to slightly higher policy rates, it said.