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Cypriots upbeat on economy as recovery consolidates

The economic sentiment indicator rose by 4.5 units this month, to 119.5, a new high since its introduction in 2001, showing that economic growth is consolidating, the University of Cyprus said.

Still, “the volatility of the index may indicate that the economic environment remains uncertain,” the Economic Research Centre (ERC) of the Nicosia-based university said in a statement on its website on Friday. In September it rose by 4 units after slumping 7 units the previous month.

The improved economic sentiment was attributed mainly on more optimism in the services sector and to a lesser degree in retail trade and industry, the ERC said.

In the services sector, the improved sentiment resulted from improved evaluation of the current financial situation of interviewed companies and demand, as well an upwards revision of turnover expectations, the ERC said.

Also, an increase in sales over the past three months and expectations they will continue to do so over the next quarter, resulted in more confidence in the retail trade in October, it said. The improved sentiment in the industry sector is linked to less pessimistic responses on the interviewed companies’ current situation, combined with an upwards revision of expected output levels over the next three-month period.

The business sentiment in the construction sector declined this month, the ERC said, mainly due to negative evaluations of the current order book and a downward revision of expectations of employment levels.

Consumer confidence remained unchanged this month, the centre said.

The economy expanded 3 per cent last year and grew an annual 3.6 per cent both in the first and the second quarters, according to Cystat. This prompted the finance ministry last month to revise its growth forecast for 2017 upwards, to 3.6 per cent from an initial 2.9 per cent. The unemployment rate in August dropped to 10.7 per cent, which is the lowest since March 2012.

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