Subdued Growth for Cyprus’ Economy
The economic pulse of Cyprus, as measured by the Cyprus Composite Leading Economic Index (CCLEI), is showing signs of significant deceleration. The CCLEI, a barometer for future economic activity, is teetering on the brink of stagnation with an almost negligible year-over-year growth of 0.1% in February. This figure contrasts with the more robust growth rates of 0.7% and 1.6% witnessed in January 2024 and December 2023, respectively.
According to the Economics Research Centre (CypERC) at the University of Cyprus, a multitude of factors are contributing to this slowdown. The study points to a range of prevailing developments and uncertainties that are putting a damper on the CCLEI’s trajectory, which in turn casts a shadow over the broader economic outlook for Cyprus.
Compounding the issue is the broader European economic climate. “Several major European economies appear to be at risk of entering recessionary phases,” note the authors of the CCLEI report. They also highlight the ongoing geopolitical tensions, including military conflicts in the Middle East and the protracted Russia-Ukraine war, as exacerbating factors with no imminent resolution in sight.
The negative trend is further reflected in the Economic Sentiment Indicator (ESI) for both the euro area and Cyprus. For the first time since February 2023, Cyprus’s ESI has dipped into negative territory.
Despite these challenges, there are glimmers of resilience within the Cypriot economy. The marginal positive growth of the CCLEI in February 2024 can be attributed to certain domestic factors. These include a slight decline in the international Brent Crude oil price and positive movements in property sales contracts, tourist arrivals, credit card transactions, electricity production, and retail sales volume.
The CypERC’s analysis underscores a cautious outlook for Cyprus’s economy. The January CCLEI had already signaled a slowdown influenced by international geopolitical tensions and a deceleration in Eurozone economic activity. As such, stakeholders are keeping a watchful eye on these indicators, which serve as a harbinger for the economic path that lies ahead for Cyprus.
