Retail, real estate and tourism moderate Cyprus economic slowdown

The Cypriot economy continued its slowdown in November, carrying on with the trend of the two previous months, according to a report by the University of Cyprus Economic Research Centre released this week.

The Cyprus Composite Leading Economic Index (CCLEI), which uses a variety of metrics to provide an early outlook on future economic activity, declined by 4.1 per cent year-on-year in November 2022.

This follows two previous instances of decline in October and September 2022, when the index decreased by 3.8 per cent and 3.8 per cent respectively, based on the most recent and revised data.

“The Economic Sentiment Indicators (ESIs) in both Cyprus and the euro area recorded a year-over-year decline in November 2022, compared to the corresponding month of 2021, with the economic climate noting the greatest deterioration in the services sector both in Cyprus and in the euro area,” the report said.

The report also noted that at the same time, the elevated international Brent Crude oil prices continue to contribute to the negative year-on-year rate of the CCLEI, with oil prices remaining higher than in the same period of the previous year.

Additionally, the report explained, the temperature-adjusted volume of electricity production, which has a relatively higher weighting in the index compared to the rest of its domestic components, also contributes to the index’s drop in November.

Conversely, the acceleration recorded in the year-over-year growth rate of the remaining domestic components of the CCLEI in November restrains the further decline of the Index.

“In particular, the total number of property sales contracts, the value of credit card transactions, the retail sales volume, as well as the volume of tourist arrivals, contribute to the short-term strengthening of the Cypriot economy,” the report explained.

“The negative year-over-year CCLEI growth rate largely reflects the continuing
uncertainty and slowdown of the European economy which inevitably affects the prospects of the Cypriot economy as well,” the report concluded.