Wholesale and tech sectors drive Cyprus economic outperformance

Cyprus’ GDP grew by 3 per cent year-on-year during the first quarter of 2026, significantly outperforming both the euro area and the European Union.

According to figures from both the Cyprus Statistical Service (Cystat) and Eurostat, the seasonally adjusted GDP growth rate in Cyprus was driven primarily by the sectors of wholesale and retail trade, information and communication, and financial and insurance activities.

This reflects the continued importance of the technology and services sectors to the country’s economic performance.

On a quarter-on-quarter basis, Cyprus’ GDP expanded by 0.2 per cent, matching the EU average growth rate, while the euro area recorded a more modest increase of 0.1 per cent.

In annual terms, Cyprus’ 3.0 per cent growth rate stood well above the EU’s 1.0 per cent and the euro area’s 0.8 per cent, highlighting the island’s relative economic strength despite a broader slowdown across Europe.

However, Cyprus’ growth rate moderated compared with the previous quarter, when the economy had expanded by 4.3 per cent year-on-year in the fourth quarter of 2025, indicating some easing in momentum.

Across the European economy, GDP growth slowed on an annual basis, with the euro area declining from 1.3 per cent in the fourth quarter of 2025 to 0.8 per cent in the first quarter of 2026, while the EU fell from 1.4 per cent to 1.0 per cent over the same period.

Quarterly growth in the EU remained stable at 0.2 per cent, while the euro area saw a slight deceleration from 0.2 per cent in the previous quarter to 0.1 per cent.

Beyond Europe, the United States economy recorded stronger growth, with GDP increasing by 0.5 per cent quarter-on-quarter, compared with 0.1 per cent in the previous quarter.

On an annual basis, the US economy expanded by 2.7 per cent, Eurostat reported, up from 2.0 per cent in the previous quarter, pointing to more robust economic momentum relative to Europe.

Labour market data showed modest employment growth across Europe, with employment rising by 0.1 per cent quarter-on-quarter in both the euro area and the EU.

Compared with the same quarter of the previous year, employment increased by 0.5 per cent in the euro area and 0.6 per cent in the EU, slightly below or in line with the previous quarter’s performance.

The data also showed that employment growth slowed in the euro area from 0.7 per cent year-on-year in the fourth quarter of 2025, while remaining stable at 0.6 per cent in the EU.

The figures underline Cyprus’ stronger-than-average economic performance, supported by key service industries, even as European growth weakens and external conditions remain subdued.