Cyprus Business Now: presidency, CBC, tax reform, GDP growth, bankers
The central bank said gross domestic product (GDP) growth in Cyprus is forecast to reach 3.5 per cent in 2025, compared with a revised growth rate of 3.9 per cent in 2024.
The forecast further anticipates that during the period 2026 to 2028, GDP growth will average 3 per cent per year.
The projections were published as part of the central bank’s December 2025 forecasts for the main macroeconomic aggregates of Cyprus, covering GDP, unemployment, inflation and inflation excluding energy and food.
The publication also includes an analysis of potential deviations from the baseline scenario for both GDP growth and inflation.
“The projected GDP path is mainly driven by the expected further increase in domestic demand throughout the forecast horizon,” the central bank said.
“Domestic demand is expected to be supported by higher private consumption due to rising real disposable income of households and the continued resilience of the labour market,” it added.
The choice of Lefkara, a village with international recognition for its cultural heritage, was intended to anchor Cyprus’ European role in a narrative of continuity and outward orientation, while at the same time underlining the island’s strategic position in the eastern Mediterranean.
Against that backdrop, officials described the event as the first public marker of a presidency prepared over months at administrative and political level.
Speaking at the ceremony, President Nikos Christodoulides described the moment as “a milestone day in our European journey”, explaining that Cyprus was not merely assuming an institutional role, but “primarily responsibility. Responsibility towards Europe, towards our fellow citizens, towards the future.”
According to the findings, 64.6 per cent of the population belonged to the middle income class last year, while 27.8 per cent were classified in the lower income class and 7.6 per cent in the upper income class.
The classification follows the methodology recommended by the Organisation for Economic Co-operation and Development (OECD) and is based on equivalised disposable household income, which adjusts total household income for household size and composition.
Under this framework, the middle income class includes individuals living in households with income between 75 per cent and 200 per cent of the national median, while income below 75 per cent places households in the lower income class and income above 200 per cent in the upper income class.
The association said its research was conducted between December 10 and December 19, based on three separate retail price surveys carried out exclusively in supermarkets in Nicosia. The survey covered a total of 34 food and beverage items.
The research aimed to calculate the cost for both four- and six-member households across three categories, a “rich” basket including all 34 products, an “economic” basket covering 19 items and a reduced basket for the weakest income groups based on just 11 products.
In its statement, the council said the very small size of most Cypriot firms remains a key constraint on growth, noting that around 90 per cent of businesses employ fewer than 10 people.
That fragmentation, it argued, limits productivity, access to finance, innovation capacity and the ability of companies to compete internationally.
Larger firms, it said, typically benefit from economies of scale, stronger bargaining power with suppliers and customers, easier and cheaper access to funding, greater scope for research and development and improved resilience through diversification.
Scale also allows businesses to expand abroad, whether through exports, foreign subsidiaries or strategic cross-border mergers.
At the same time, the council cautioned that size alone is no guarantee of success.
It warned that large organisations can suffer from bureaucracy, slower decision-making, reduced flexibility and a growing distance from customers, particularly in fast-changing and highly competitive markets.
The agreement provides for salary increases, additional annual leave and improved loan terms for bank employees.
According to a statement by Etyk, the understanding was reached with the Bank Employers’ Association following months of negotiations, which intensified in recent months.
Etyk said the talks gained momentum after the re-establishment of the Bank Employers’ Association, which, after almost a decade, assumed responsibility for negotiating the renewal of the collective agreement with the union.
“After months of tough negotiations, the two sides managed to reach an agreement in principle for the renewal of the collective agreement, which generally seems to satisfy both sides,” Etyk said.
The aim of the bill is to modernise its structure and align it with current economic and institutional realities.
The meeting lasted more than an hour and a half and focused primarily on the proposed legislation prepared by the central bank.
“I would like to thank the governor of the central bank,” the finance minister said after the meeting, adding that they had been given the opportunity to be briefed on the new bill concerning changes to the governance of the CBC, which is being prepared by the institution itself.
Governor Patsalides described the meeting as “very useful” and said discussions had begun with the proposed bill for the central bank.
“We started with the proposed bill for the central bank,” he said.
The changes will be implemented from January 2026, marking a comprehensive revision of how inflation is calculated and presented in Cyprus.
As part of the update, the shopping basket used to compile the CPI will be revised, ensuring that the goods and services included better mirror how households actually spend their money today.
The Statistical Service will also update the weights assigned to individual items, a process that reflects their relative importance in household expenditure and directly affects inflation calculations.
Across the European Union, actual individual consumption per capita ranged widely in 2024, from 72 per cent to 146 per cent of the EU average, which is set at 100, according to the statistical office.
Actual individual consumption per capita, expressed in purchasing power standards, is used as a key indicator of the material welfare of households, as it reflects the volume of goods and services actually consumed.
In this context, Cyprus recorded an actual individual consumption index of 98, placing it just below the EU average and indicating broadly comparable living standards to the bloc as a whole.
Across the EU, 25.2 per cent of gross final energy consumption came from renewable sources in 2024, marking an increase of 0.7 percentage points compared with 2023, according to the European statistical office.
Despite this improvement, Eurostat reported that the EU remains 17.3 percentage points short of its 2030 target of 42.5 per cent, a gap that would require an average annual increase of 2.9 percentage points between 2025 and 2030 to close.
Within this broader European context, Cyprus recorded a renewable energy share of 21.900 per cent in 2024, continuing a clear upward trend that has been sustained for nearly a decade.
The new online tool brings together key economic indicators of Cyprus on a single webpage, responding to growing demand for fast and reliable statistical information.
According to the statistical service, the dashboard has been designed to offer direct, intuitive and user-friendly access to up-to-date data through interactive charts.
The platform provides an integrated picture of the economy by covering economic activity, the labour market, tourism, construction and industry, allowing users to track developments across multiple sectors simultaneously.
Early estimates suggest that the average price of agricultural goods produced in the EU increased by 3 per cent in 2025 compared with 2024, as the bloc’s farm sector recovered from a mild decline recorded last year.
The average price of goods and services consumed in agriculture, including inputs such as fertilisers and energy, also rose in 2025, though more modestly, by less than 1 per cent, according to Eurostat.
The chamber said the agenda presents “a coherent and realistic framework to bolster the European economy and enhance the bloc’s strategic standing“.
In its statement, Keve welcomed the focus on strengthening the competitiveness of the European economy.
It said that the emphasis on deepening the single market, supporting businesses (especially small and medium-sized enterprises), attracting investment and reducing administrative and regulatory burdens “resonates with the needs of both the European and Cypriot business communities”.
According to the chamber, these priorities “directly reflect the needs of entrepreneurs and firms across the EU who increasingly call for a business environment where growth is underpinned by reduced bureaucracy and improved conditions for investment and innovation”.
The chamber said the overhaul “marks a historic step” in modernising the country’s tax system and strengthening competitiveness at a time when the economy is seeking sustainable growth and investment.
In its statement, Keve said the adoption of the reform laws represents “a milestone modernisation that aligns the tax framework with the realities of the contemporary economy and lays the foundations for a competitive and sustainable economic model“.
According to Keve, the reform “offers a historic opportunity to upgrade Cyprus’ competitiveness by reinforcing stability, transparency and the island’s international appeal as a business and investment destination”.
The chamber also welcomed the fact that long-standing proposals from the private sector were incorporated into the final framework, shaping what it described as a more functional and development-oriented tax system.