Cyprus economic sentiment deteriorates in September

The economic climate in Cyprus worsened in September, with the Economic Sentiment Indicator (ESI) decreasing by 1.4 points compared to August, according to the University of Cyprus’ Economics Research Centre (CypERC).

The centre pointed out that the decline in the ESI was primarily driven by a downturn in business sentiment in the services and construction sectors, reversing the gains in economic confidence recorded in the previous month.

Moreover, the CypERC explained that the dip in the services sector was mainly due to less favourable assessments of current business conditions and, to a lesser extent, lower expectations for future turnover.

Meanwhile, the weakening of sentiment in the construction sector resulted from more negative responses concerning ongoing projects and reduced optimism about future employment levels.

In contrast, the retail sector saw an improvement in sentiment, with more positive evaluations of sales over the past and upcoming quarters.

The manufacturing sector also strengthened for the second consecutive month, thanks to more favourable assessments of current orders and optimistic expectations for production in the next quarter.

Additionally, consumer sentiment improved marginally in September. This was mainly attributed to better consumer responses regarding both their recent and future financial situations.

“The Economic Uncertainty Index for Cyprus decreased in September,” the report said, attributing this to a number of reasons.

“Factors contributing to heightened uncertainty in August, such as international market volatility and issues surrounding the Cyprus-Greece electricity interconnection, had less impact in September,” the report said.

“Furthermore, a slowdown in inflation and declining interest rates have eased the ability of businesses and households to assess their future economic prospects,” it added.

It should be noted that the University of Cyprus’ Economics Research Centre compiles the country’s economic sentiment as part of the Joint Harmonised European Union Programme of Business and Consumer Surveys, in collaboration with RAI Consultants Ltd.

The programme is funded by the European Union, the Ministry of Finance, and the University of Cyprus.