articles | 16 April 2021

Cyprus economy improves, economists say, but vaccine rollout is key

The economy has solid ground on which to recover, according to a report by the University of Cyprus Economic Research Centre.

The report notes, however,  that this is contingent on how the Covid-19 pandemic continues to unfold and how this is handled by the state.

In terms of the positives for the economic recovery of Cyprus, the report explains that the comprehensive vaccination campaign and the partial but ongoing loosening of any lockdown measures has contributed to an improvement in the Cypriot economy during March.

“The recovery of the CCLEI in March 2021 reflects the extensive vaccination campaigns and the gradual lifting of the restrictive measures against the Covid-19 pandemic, which have helped to form improved economic growth expectations and conditions,” the report states.

The above is also reflected in the Euro area Economic Sentiment Indicator, since similar efforts are being implemented elsewhere within the European Union.

“In March 2021, the Economic Sentiment Indicator (ESI) improved sharply in both the EU and the euro area,” a European Commission report has noted.

“For the first time since the outbreak of Covid-19 on the continent, the ESI is back at (EU), or slightly above (EA), its long-term average,” the report adds.

The University of Cyprus report does note that the increased price of Brent crude oil and the heavily diminished number of tourist arrivals to Cyprus do make a negative impact on the country’s future prospects.

Moreover, while retail has predictably taken a massive hit from the pandemic and the related lockdown measures, it did register some improvement during March.

The report concludes that pending the continuation of an efficient and speedy vaccination campaign, as well as how the Covid-19 evolves over the next year, the seeds of recovery for Cyprus are there and can contribute to some improvement to the country’s finances in the future.

The report takes into account a range of variables, including the price of Brent crude oil, the Economic Sentiment Indicator for the Eurozone, the total amount of property sales made during the applicable period, the total sum of all VISA card transactions on the island, the number of tourists who have arrived to Cyprus, the index of all retail trades made, as well as the electricity production volume index.

In the report, the University of Cyprus presents a monthly update on the country’s Composite Leading Economic Index, which identifies and analyzes certain key metrics and factors. When combined and contrasted with the equivalent historical data, these metrics can provide an indication on how the economy is doing at the moment and how it is expected to fare in the coming months.

Source: Cyprus Mail

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