Shift in Economic Sentiment and Consumer Confidence in Cyprus
In a recent assessment by the Centre for Economic Research (CER), Cyprus has experienced a dip in economic sentiment for the second month in a row. The Economic Sentiment Indicator (ESI) saw a reduction by 1.2 units from February 2024, settling at 102.1 units in March. This decline is attributed to a general deterioration in the business climate across various sectors, with companies adjusting their expectations for the upcoming quarter.
While the overall business outlook has dimmed, there’s a silver lining as consumer confidence has shown resilience with a modest uptick. This improvement, however, is juxtaposed with a noted reluctance among consumers to commit to major purchases in the near future.
The service sector, despite a positive view of the current economic situation, faced a decline in sentiment due to reduced expectations for future turnover. The retail trade and construction sectors remained stable in their current business situation assessments but expressed more pessimistic views regarding retail sales and employment prospects.
Manufacturing sentiment took a hit as well, with concerns over inventory levels and production forecasts for the next quarter casting a shadow over the sector’s outlook.
On a more optimistic note, the CER reported that consumers have slightly adjusted their outlook since February’s more pessimistic stance. There’s been an upward revision in their expectations for their personal economic situation and the broader economic future of Cyprus. Despite this positive adjustment, consumer expectations have not yet reached the levels seen in March of the previous year.
Adding to the mixed economic picture, the Economic Uncertainty Index has seen a decrease to 29.5 units this March, indicating a slight reduction in uncertainty. However, it’s important to note that this figure still surpasses the index level from the same period last year, signaling that uncertainty remains a factor in the economic landscape of Cyprus.
