Cyprus banks assess economic risks: From growth to potential downturn

Major Cyprus banks have presented economic development forecasts, showing a wide range of possible scenarios — from stable growth to a serious downturn.

According to the base forecast of the Bank of Cyprus, the country's economy in 2026 could grow by approximately 2.6%, with moderate inflation and a slight increase in real estate prices. However, the bank emphasizes that the situation remains vulnerable due to geopolitical instability and a decline in global trade flows.

In a negative scenario, a GDP drop of more than 5% is projected, along with rising unemployment and falling real estate prices. At the same time, under favorable conditions, the economy could show more confident growth — exceeding 4%.

Similar assessments are provided by other banks.

Eurobank and Alpha Bank are also considering a wide range of scenarios: from moderate growth to near-zero dynamics, depending on external factors, including inflation, global trade, and the level of global tension.

Experts note that the Cyprus economy is particularly sensitive to external risks due to its dependence on tourism, international business, and services.

The banks emphasize that future dynamics will directly depend on the development of the geopolitical situation and the global economy.