Geopolitical instability dampens Cyprus’ economic growth, report shows

The Cyprus Composite Leading Economic Index (CCLEI), compiled by the University of Cyprus’ Economic Research Centre (CypERC), registered an annual increase of 1.8 per cent in November 2023, according to a report released this week.

This follows previous increases of 1.9 per cent and 2.4 per cent in October and September 2023, respectively, based on the most recently revised data.

An announcement by the research centre highlighted that the Composite Leading Economic Index continued to decelerate in November 2023.

The centre noted that the ongoing military conflicts in Israel since October further burden the already adverse international geopolitical environment, unavoidably impacting November’s economic index.

The report specifically made note of the adverse influence of increased geopolitical tensions on the Economic Climate Index (ECI) in the euro area, with the annual growth rate of the ECI remaining negative since April 2022.

In contrast, the positive annual growth rate of the Composite Leading Economic Index in November is attributed to the growth in various domestic sectors, including real estate, tourism, retail trade, and electricity production.

Additionally, the decline in international oil prices significantly contributed to stabilising the Composite Leading Economic Index, having experienced a notable decrease in November 2023.

“In summary, despite the ongoing deceleration in November 2023, the annual growth rate of the Composite Leading Economic Index remains positive,” the centre said in its report.

“The continued slowdown reflects the heavily burdened geopolitical and unstable economic environment, inevitably adversely impacting the growth prospects of the Cypriot economy,” the report concluded.