Uncertainty declines for third month as confidence improves

Cyprus’ economic climate improved in December 2025, according to the University of Cyprus’ Economics Research Centre (CypERC).

This uplift was primarily driven by stronger business sentiment in services and retail trade and rising consumer confidence, pushing the Economic Sentiment Index higher.

According to the research centre, the Economic Sentiment Index rose by 1.6 points in December 2025 compared with November, reflecting broader optimism across key sectors of the economy.

Business sentiment in the construction and manufacturing sectors remained at the positive levels recorded in November, indicating continued stability in these areas.

“Surveys recorded indications of price increases in the coming months, as both business expectations for selling prices and households’ expectations for consumer prices moved upwards,” according to the Economic Sentiment Survey released by the CypERC.

The Economic Uncertainty Index fell for a third consecutive month in December 2025, mainly due to a significant decline in consumer uncertainty and a reduction in business uncertainty in services and manufacturing.

More specifically, CypERC said that the improvement in sentiment in the services sector stemmed from a marked strengthening in businesses’ assessments of their financial situation and turnover over the past quarter.

The strengthening of sentiment in retail trade was attributed to more positive business expectations regarding sales in the next quarter.

Sentiment in construction and manufacturing remained stable at the positive November levels, as weaker expectations were offset by improvements in the current situation of businesses.

In December, consumer sentiment strengthened significantly, primarily due to a rise in consumers’ intentions to make major purchases, CypERC said.

In addition, consumers’ assessments of their own financial situation, and particularly their expectations regarding the country’s future economic situation, continued to show improvement.

Relatively high levels of economic confidence, combined with declining consumer and business uncertainty, are creating favourable conditions for economic activity in Cyprus in the coming months, the CypERC survey concluded.