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Retail and tourism keep Cypriot economy on growth path

Retail and tourism keep Cypriot economy on growth path

Buoyed by the tourism and retail sectors, the Cypriot economy continued to be on an upwards trajectory in August according to a report by the University of Cyprus Economic Research Centre.

Cyprus’ Composite Leading Economic Index (CCLEI), which uses a variety of metrics to provide an early outlook on future economic activity, increased by 10.8 per cent year-on-year in August.

“The CCLEI continues to record positive year-over-year growth rates in July and August 2021, albeit somewhat weaker,” the report said.

“More specifically, according to preliminary data in August, a positive effect on the
CCLEI and domestic economic activity is still exerted by tourist arrivals, which present a relatively good tourist depiction in August amid a 4th wave of the pandemic, as well as the volume of retail sales,” it added.

It must be noted, however, that the yearly increase is higher than expected due to the particularly depressed state of the economy during the previous year.

This continues the positive trend seen in July and June, where the index grew by 11.2 per cent and 11.7 per cent respectively.

For July specifically, the growth rate increase was partly attributed to retail sales, as well as the increased number of vaccinated people which is linked to the stimulation of business activity.

“The positive year-over-year growth rate of CCLEI is due, in part, to the steady progress of vaccination campaigns and the improved expectations and conditions it creates,” the University of Cyprus’ report said at the time.

The performance of the real estate market, as well as the total number of credit card transactions, were also positive factors for the rise of the economic index in August.

Moreover, the economic sentiment in Cyprus also grew and contributed to the growth rate during the same month.

This bucked the wider Eurozone trend, where oil prices and the unpredictability of the pandemic had adverse effects on economic sentiment.

“The growth rate of the Economic Sentiment Indicator (ESI) in Cyprus has a positive effect on the CCLEI, which strengthened in August 2021 compared to July due to the strengthening of the confidence in the services sector and consumer confidence,” the report noted.

“On the contrary, the weaker year-over-year growth rate of the ESI in the euro area, which reflects the economically uncertain environment due to the pandemic, as well as the significant year-over-year increase in the Brent crude oil price contributed negatively
to the growth of the CCLEI in August,” it added.

The report concludes by saying that the positive year-on-year growth rate of the CCLEI bodes well for the Cypriot economy’s recovery, while still acknowledging the risks emerging from the uncertainty of the pandemic.

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