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Cyprus economy: indicators confirm slowdown but no recession

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Various indicators only serve to confirm previous forecasts expecting the Cypriot economy to experience a slower growth rate throughout 2023, while managing to avoid a recession, according to a report released this week by the Centre for Economic Research of the University of Cyprus.

According to the most recent and revised data used in the report, the Cyprus Composite Leading Economic Index (CCLEI) recorded a decline of 3.5 per cent year-on-year in January 2023, following the year-on-year decreases of 3.6 per cent in December and 4.2 per cent in November 2022.

“Although improved [over the previous month], the year-over-year growth rate of the CCLEI in January 2023 is negative,” the report noted.

“The international Brent Crude oil price was among the contributors to the CCLEI’s
improvement, recording a decline in its year-over-year growth rate for the first time since
January 2021,” it added.

What is more, the report explained that the contribution of Cyprus’ tourism sector, in terms of the volume of passenger traffic in January 2023, was significant.

International arrivals during this time surpassed the record recorded in 2019. In addition, according to estimates, which take into account bookings and recorded interest, the volume of expected passenger arrivals during the following months points towards the overall boost in Cyprus’ tourism sector in 2023.

Elsewhere, the report noted that “the acceleration recorded in the growth rate of the remaining domestic components of the CCLEI further reinforces the improved path of the index”.

This refers to a number of indicators, including building permits, a sign of future economic activity, as well as credit card transactions, a reflection of people’s willingness to spend and how well the retail sector is performing.

“On the contrary, the Economic Sentiment Indicators in the euro area and in Cyprus continue to restrain the upward trend of the index,” the report stated.

“The improved but negative CCLEI growth rate in January 2023 is in line with economic forecasts for 2023, according to which Cyprus is expected to record a significant slowdown, compared to 2022, but not enter into a recession phase,” it concluded.

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