Economic sentiment in Cyprus declined in June 2025, with the Economic Sentiment Indicator (ESI) falling by 0.8 points compared to May, according to the Economics Research Centre (CypERC) of the University of Cyprus.

The decline came despite a slight improvement in consumer confidence and upward revisions in business expectations for turnover in the next quarter.

At the same time, the Economic Uncertainty Index recorded an increase in June following five months of decline.

CypERC stated that the drop in the ESI was driven by a deterioration in business sentiment in retail trade and manufacturing, as well as another decline in economic confidence in the services sector.

“The weakening of sentiment in services resulted from a worsening of the current situation, with firms’ assessments of their financial condition and turnover dropping significantly for a third consecutive month,” the report said.

However, it added that business expectations for turnover in the next quarter improved in June.

Moreover, the economics research centre said that the deterioration in retail trade was also due to a fall in business assessments of their current state, including both sales and inventories.

The slight decline in sentiment in manufacturing was attributed both to a worsening of the current situation, particularly in stock assessments, and to lower expectations for future production.

In contrast, sentiment in construction improved, mainly due to more positive assessments of the current situation, including building activity and projects under development.

Consumer sentiment also strengthened slightly in June, driven largely by more favourable assessments of the country’s future economic outlook and an increased willingness among consumers to make major purchases.

Regarding the Economic Uncertainty Index, CypERC reported that it rose in June, reversing the downward trend seen over the previous five months.

“The increase in the Index was the result of higher uncertainty facing businesses, particularly in services and retail trade, concerning their future economic condition, possibly due to the recent escalation in geopolitical tensions and their impact on the economic environment,” the centre explained.

However, CypERC stated that uncertainty among households regarding their future economic situation remained at low levels.