Cyprus economic indicators signal caution

The annual growth rate of the Composite Leading Economic Index (CPI) of Cyprus continued to slow in February 2024, remaining marginally positive.

This trend, according to the Economics Research Centre (CypERC) of the University of Cyprus, can be attributed to the fact that “international economic and geopolitical uncertainties inevitably affect the increase of CPI, and therefore the prospects for the growth of the Cypriot economy.”

Furthermore, for the first time since February 2023, the annual growth rate of the Economic Climate Index (ECI) in Cyprus has also turned negative, indicating a shift in economic sentiment.

Delving deeper into the factors influencing the CPI, the CypERC highlights that the annual growth rate in February 2024 managed to stay positive, albeit marginally.

This slight positivity is due to “a slight decline in the annual growth rate of the international Brent Crude oil price and the growth of various domestic components of the CPI in February 2024; compared to February 2023, including real estate sales documents, tourist arrivals in Cyprus, credit card transactions, electricity generation, as well as a slight increase in retail sales volume.”

Specifically, the CPI, as constructed and estimated by the CypERC, recorded an annual increase of 0.1 per cent in February 2024.

This followed annual increases of 0.7 per cent and 1.6 per cent in January 2024 and December 2023, respectively, according to recent and revised data.

Moreover, the report adds context to the broader European economic landscape by stating that “several major European economies appear to be at risk of entering recessionary phases, while persistent military conflicts continue in the Middle East, alongside the ongoing Russia-Ukraine war (with no signs of resolution).”

Consequently, these global uncertainties have also contributed to the negative annual growth rate of the ECI in the euro area, which persisted into February 2024.