The economic climate in Cyprus witnessed a decline in July 2023, with the Economic Sentiment Indicator (ESI) dropping by 2.7 units compared to June.

According to an announcement from the Centre for Economic Research at the University of Cyprus, the decrease in the ESI resulted from a deterioration in the business climate in the services sector and, to a lesser extent, a weakening of consumer confidence.

The downturn in the services sector’s climate was attributed to worsening assessments of the current business conditions, including the economic situation and business expectations for the next three months, and a downward revision in expectations for future business activity.

On the other hand, the retail trade climate remained stable, as there were no significant changes in current business conditions and expectations for businesses.

In the construction sector, businesses provided more favourable evaluations of their ongoing projects and revised their employment expectations upward, leading to an improvement in the climate.

Moreover, in the manufacturing sector, the climate further strengthened, mainly due to more positive expectations for production over the next quarter.

What is more, consumer confidence experienced a slight setback in July, as consumers downgraded their expectations for the future economic conditions of both their households and the country as a whole.

Nevertheless, consumers’ intentions to make significant purchases in the next few months strengthened.

The Economic Uncertainty Indicator increased in July, driven by rising uncertainty among consumers and businesses in all sectors, except for the retail trade.

These findings reflect the current economic challenges and uncertainties faced by Cyprus amid changing market dynamics. As businesses and consumers navigate through this period, economic authorities are closely monitoring the indicators and strategising measures to support economic stability and growth.

The Centre for Economic Research at the University of Cyprus continues to provide valuable insights to assist policymakers and stakeholders in making informed decisions in these challenging times. Further updates and analyses are expected as the economic situation evolves.