articles | 21 October 2023

Cyprus economy sees positive trends in September — risks on the horizon

Cyprus’ Composite Leading Economic Indicator (CCLEI), compiled by the University of Cyprus’s Economic Research Centre (CypERC), displayed a 2.6 per cent annual increase in September 2023, a reflection of positive trends during this period.

This follows the 2.6 per cent and 3 per cent annual increases in August and July 2023, respectively. According to a statement released this week, the CCLEI’s annual growth rate remained stable in September 2023. This stability is partially attributed to the annual growth rate of temperature-adjusted electricity production, which experienced a yearly decrease since May 2023.

Additionally, the positive trend in the CCLEI is tempered by the Economic Climate Index (ECI) in the eurozone, which showed negative annual growth in September 2023, unlike Cyprus. The CypERC noted that the uncertainty in the European economic environment due to geopolitical conflicts and the climate crisis is reflected in the ECI’s deterioration throughout 2023. On the contrary, the Cypriot economy has benefited from the growth of various domestic sectors, including tourism and retail, which, in turn, had a positive impact on the CCLEI in September.

Summing up, the CypERC reported that the positive annual growth rate of the CCLEI continues in September 2023. However, it explained that the maintenance of the growth rate at comparable levels with the previous month reflects the insufficiently stable economic framework, particularly in Europe, which inevitably affects the development prospects of the Cypriot economy. Given the estimated limited CCLEI in September, it is expected that the recent conflict in Israel, which further burden the international geopolitical and economic environment, will have negative effects on the CCLEI in October.

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