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Cyprus economic climate deteriorates

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The Economic Research Centre of the University of Cyprus on Wednesday released its latest Economic Sentiment Index (ESI) for September 2023, revealing a deterioration in economic sentiment compared to August, reflecting the numerous ongoing economic challenges.

The ESI, a crucial indicator of economic health, dropped by 1.6 points in September, indicating increased economic uncertainty in the region.

However, it’s important to note that despite these fluctuations, the ESI has remained consistently above the long-term average of 100 points over the past nine months, the report explained. This resilience indicates ongoing economic activity but is accompanied by lingering uncertainty and challenges.

The decline in the ESI was primarily attributed to a further weakening of consumer confidence and a decrease in business sentiment across various sectors, with the exception of the construction industry.

In the services sector, businesses reported less favourable assessments of their recent economic performance, leading to a marginal decline in overall sentiment within this sector.

Moreover, the retail sector also experienced a downturn, primarily due to pessimistic evaluations of current business conditions, including recent sales and current inventories.

However, the manufacturing sector saw a slight dip in sentiment, mainly attributed to downward revisions in production expectations for the upcoming quarter.

In contrast, the construction industry witnessed a marginal improvement in sentiment due to more optimistic employment expectations for the sector in the next quarter.

The consumer climate in Cyprus, meanwhile, reached its lowest point of the year in September.

Compared to August, consumers expressed more negative views about both their current and future financial situations.

This drop in consumer confidence is indicative of growing economic challenges faced by households.

In addition,, the Economic Uncertainty Index saw an increase in September, reflecting heightened uncertainty among both consumers and businesses, particularly in the services and construction sectors.

The University of Cyprus’ Economic Research Centre conducts this economic sentiment assessment in collaboration with RAI Consultants Ltd as part of the Joint Harmonised European Union Programme of Business and Consumer Surveys.

The project receives funding from the European Union, the Ministry of Finance, and the University of Cyprus.

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