Southeastern Europe & Mediterranean Emerging Market Economies: Bi-Weekly Report 20 January - 2 February 2026

CYPRUS
GDP growth remained strong and broad-based in 9M:25, despite several headwinds, including from global trade uncertainties and geopolitical unrest in the Middle East, and unfavourable base effects
Economic growth should continue on a solid footing over the forecast horizon, at c. 3.0%, slightly above the economy’s long-term potential growth rate, outperforming the EA average
Risks to this outlook are tilted to the downside, primarily reflecting a more unfavourable external environment and its implications for exports of Cypriot services
Broader political continuity is expected after the May general election, although the resulting Parliament is expected to be fragmented

TÜRKIYE
Gradual disinflation allows for cautious monetary policy easing, but external buffers remain fragile
After a significant effort in FY:25, fiscal consolidation is due to progress slowly in the period ahead

ROMANIA
Inflation is expected to halve -- from current near double-digit rates -- after mid-2026, reaching the NBR’s target range (of 2.5±1.0%) by end-2027
Fiscal consolidation challenges and upside risks to inflation point to a cautious monetary policy easing cycle 

APPENDIX:
DETAILED MACROECONOMIC DATA
REGIONAL SNAPSHOT:  
        MACROECONOMIC INDICATORS