Boosted by elevated business activity and the tourism sector, the Cypriot economy remains on a path of growth and recovery 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 11.3 per cent year-on-year in September.
This continues a positive trend seen in August and July, where the CCLEI index grew 10.8 per cent and 11 per cent year-on-year respectively.
“The year-over-year growth rate of CCLEI is recorded positive during the third quarter of 2021,” the report said.
“More specifically, according to preliminary data in September, a positive effect on the CCLEI and domestic economic activity is exerted by tourist arrivals and the volume of retail sales during the third quarter of 2021,” the report added.
The report for September also notes that the number of property sales also remains a key factor in the rise of the index.
Crucially, another indicator has reversed its previously negative trend. Credit card transactions, a metric of business activity, have increased year-on-year after two months of negative annual rates.
However, the report does note that this may be attributed to a recently implemented government policy.
“The reversal of the growth rate of credit card transactions may be due, in part, to the new decree of mandatory use of credit cards in the retail sector,” the report stated.
Moreover, the index also benefited from a boost in the Economic Sentiment Indicators in both Cyprus and the Eurozone countries.
Regarding the strengthening of economic sentiment in Cyprus, this is attributed to higher confidence in all business sectors excluding the construction industry in Cyprus.
Among the indicators hurting the index is the annual growth rate of electricity production, as well as the major increase in fuel prices.
“The significant year-over-year increase in the Brent crude oil price contributes to the restraint of the year-over-year growth of the Index in September,” the report said.
The report reiterates that despite the positive outcome of the last two quarters, the evolution of the Covid-19 pandemic remains a source of uncertainty.
