Economic sentiment improved in August

Economic sentiment in Cyprus improved in August 2024, with the Economic Sentiment Indicator increasing by 1.5 points compared with July, according to the Economics Research Centre of the University of Cyprus.

The increase was driven by stronger business confidence in the services, construction and manufacturing sectors. The increase in the Services Confidence Indicator mainly resulted from firms’ improved assessments of their recent and expected turnover. The small decrease in the Retail Trade Confidence Indicator was driven by a deterioration in firms’ views on recent and future sales as well as on stock levels. The Construction Confidence Indicator rose for the second month in a row, as its components improved further.

In August, firms assessed the current levels of their order books more favourably and revised their employment expectations upwards.

The increase in the Industry Confidence Indicator was mostly due to firms’ upward revisions in production expectations.

On the other hand, the Consumer Confidence Indicator decreased in August as its components deteriorated. In August, consumers’ views on their recent and future financial situation worsened and expectations about the general economic conditions in the country fell. Moreover, consumers’ intentions to make major purchases weakened.

The improvement in economic confidence in August was accompanied by increased uncertainty. In August, the Economic Uncertainty Indicator for Cyprus rose markedly, owing to external and domestic factors. The ongoing geopolitical tensions, mainly in the Middle East, the high volatility in international markets in August that reflected concerns over global economic activity, as well as setbacks in major investment projects in Cyprus (mainly relating to the energy infrastructure) are among the factors that triggered business and consumer uncertainty.