Economic climate in Cyprus declines for second consecutive month

The economic climate in Cyprus experienced a downturn in March, with the Economic Sentiment Indicator (ESI) falling due to worsening business conditions across all sectors.

Specifically, according to the Centre for Economic Research (CER), the ESI in March dropped by 1.2 units compared to February 2024, settling at 102.1 units.

“The decline in ESI stemmed from the deterioration of the business climate in all sectors, mainly due to lower expectations for activity in the next quarter,” the CER said.

It added that, conversely, consumer sentiment saw a slight improvement, although consumer intentions to make significant purchases in the coming months weakened in March.

Moreover, despite improved assessments of current business conditions, the sentiment in services declined due to downward revisions in expectations for next quarter’s business activity.

In retail trade and construction, evaluations of current business conditions remained relatively unchanged from February; however, expectations regarding retail trade sales and the number of employees in construction were more pessimistic in March, resulting in weakened sentiment in these sectors.

In manufacturing, the climate deteriorated due to more adverse assessments of final product inventory levels and negative forecasts for next quarter’s production.

According to the CER, consumers partially revised their pessimistic responses originally recorded in February, leading to an increase in consumer sentiment in March.

Specifically, consumers evaluated recent and future economic conditions less unfavourably but revised their expectations for future economic conditions in Cyprus upwards.

Nevertheless, consumer expectations remain lower than those recorded in March 2023.

Finally, the Economic Uncertainty Index declined to 29.5 units in March, although it remains higher than the corresponding level from last year.