Cyprus economic sentiment decreases in December 2011

The business climate in Cyprus deteriorated in December 2011 since the Economic Sentiment Indicator (ESI) decreased by 1.7 points, compared to November 2011.

According to the Economic Research Centre (ERC) of the University of Cyprus, ESI has decreased mainly due to the deterioration of the climate in manufacturing and the negative prospects of employment in that sector. It is also caused by the deterioration of the climate among the consumers due to their low expectations for their economic situation and the unemployment in Cyprus during the next 12 months.

The decrease of the ESI during the past few months forecasts a recession of the change of pace of Cyprus’ GDP during the next quarters, the research points out.

Business climate in services sector in December 2011 has slightly fell, compared to November 2011, due to a deterioration of the current situation. Many businesses have negatively evaluated their situation and the demand during the past three months. In addition, most of the businesses have marked a decrease in the employment during the last three months and they expect that their sales would decrease in the next three months.

The climate among consumers deteriorated in December 2011. Consumers evaluate even more negatively, compared to November 2011, their economic situation. Their expectations for 2012 remain in negative levels, according to ERC.