Cyprus economy shows mild slowdown in September

Cyprus’ economy showed signs of a mild slowdown in September 2025, according to a report from the University of Cyprus’ Economics Research Centre (CypERC).

Specifically, the research centre regularly publishes its Cyprus Composite Leading Economic Index (CCLEI) report, which provides early warning signals of turning points in business cycles and overall economic activity.

For September, the index rose by 1.8 per cent year-on-year, down from 2.1 per cent in August and 2.2 per cent in July,

The latest data highlighted that the year-on-year growth of the CCLEI weakened slightly in September, reflecting pressures from both domestic and international indicators.

The Economic Sentiment Indicator (ESI) in the euro area, the temperature-adjusted volume of electricity production, and property sales contracts were among the factors that contributed to the slowdown in the index’s rise in recent months.

At the same time, other leading indicators offered support to the economy, tempering some of the negative effects.

Positive developments such as increased tourist arrivals and robust retail trade activity, coupled with a fall in the weekly price of Brent crude oil, helped offset some of the negative pressures.

The CypERC explained that while growth remains on a positive trajectory, it is not without risks.

“The slowdown in the year-over-year growth of the CCLEI in September suggests that the growth momentum of the Cypriot economy, which despite maintaining on positive course, remains vulnerable to geopolitical developments and prevailing economic uncertainty,” the research centre said.

The CCLEI is designed to signal changes in the business cycle by capturing movements in a range of leading indicators.

Its components include the Brent crude oil price in euro, the ESI in Cyprus and the euro area, total property sales contracts, tourist arrivals in Cyprus, the value of Cypriot credit card transactions, the retail trade sales turnover volume index, and the temperature-adjusted volume index of electricity production.

These variables are regularly assessed by the CypERC and tend to precede changes in overall economic activity, making the CCLEI a key tool for monitoring Cyprus’ short-term economic outlook.

It should be mentioned that the Central Bank of Cyprus (CBC) recently updated its forecasts for the Cypriot economy, projecting GDP growth of 3.3 per cent in 2025.

The CBC emphasised that the Cypriot economy is expected to expand at a steady pace despite external challenges, with growth supported by robust domestic demand, services, and tourism.

The CBC’s outlook highlighted that inflationary pressures are gradually easing, allowing for an improvement in household purchasing power.

The forecast pointed to inflation averaging 2.1 per cent in 2025, down from higher levels recorded in previous years, suggesting that price stability is gradually being restored.

The central bank also stressed that fiscal discipline remains a priority, with Cyprus expected to maintain a budget surplus of 2.6 per cent of GDP in 2025.

Moreover, public debt is forecast to decline further, reflecting prudent fiscal management and stronger economic activity.

At the same time, the CBC stated that risks to the outlook remain significant.

These include geopolitical tensions, particularly in the wider region, as well as uncertainties surrounding energy prices and global financial conditions.

In addition, the central bank underscored that external shocks could impact both consumer and investor confidence, which in turn might influence economic momentum.

Overall, the CBC reaffirmed its confidence in the resilience of the Cypriot economy while cautioning that ongoing vigilance is required.