Cyprus Mail

Confidence in economy remains very fragile

CONFIDENCE in the Cypriot economy remains very fragile despite the fact that the economic climate showed an improvement in July 2013, with the Economic Sentiment Index (ESI) rising by 2.7 points compared with June.
According to the Business and Consumer Survey conducted by the Economics Research Centre of the University of Cyprus, despite the slight increase in the Index, ESI remains at very low levels, which foreshadows the continuation of adverse conditions in the economy.
The increase is due to the improvement of the climate recorded in services, the retail trade and manufacturing, as well as among consumers.
The exception is the construction sector, in which the economic climate continues to be at negative levels, like the previous two months.
According to the survey, after a large slump in all confidence indicators in April – due to the March banking crisis – estimates seem to revert to less negative levels that had prevailed earlier in the year.
Generally, however, confidence in the Cypriot economy remains very fragile, as there appears to be no clear trend of improvement, especially in construction, manufacturing and households.
The Capacity Utilisation Index in manufacturing and services remains below July 2012 levels in both areas, although it recorded an increase in July when compared to three months prior.
Therefore, the survey concludes, businesses in these sectors are not expected to invest in raising capital or increasing employment.
The research programme of recording the economic climate is coordinated by the Centre for Economic Research and funded by the European Union.

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