Economic sentiment in Cyprus improved in December, despite the worsening coronavirus situation, as the Economic Sentiment Indicator (ESICypERC) increased by 2.8 points to 81.3 from November, the same level as in August (81.6).
This was also the new high in March 2013, after the banking and economic crash of the year before, with the ESICypERC indicator plunging further to below 70 points by May 2013.
Having started the year in recovery mode, the confidence index reached 111 points in January and February but gradually dropped to 98.9 in March when the magnitude of the COVID-19 pandemic started to show.
By April and May, when the lockdown had a major impact on the economy, the indicator crashed to 77.0 and 72.9, respectively, struggling to pick up since then.
The University of Cyprus Economics Research Centre said the increase in the ESI-CypERC was driven by confidence gains in all sectors, except industry, as well as improvements in consumer confidence.
The increase in the Services Confidence Indicator resulted from firms’ less adverse assessments of their recent turnover and upward revisions in demand expectations, while the Retail Trade Confidence Indicator increased mainly due to more favourable assessments of stock volumes and upward revisions in sales expectations.
An increase in the Construction Confidence Indicator was driven by improved assessments of the levels of order books and upward revisions in employment expectations.
However, the Industry Confidence Indicator decreased marginally due to downward revisions in production expectations, despite more favourable assessments of the current levels of finished goods stocks.
At the same time, the Consumer Confidence Indicator registered a slight increase in December, despite harsher measures being imposed due to the record rise in daily cases of SARS-CoV-2 and the month accounting for more than half of all deaths since the pandemic started.
The UCy survey said consumers revised upwards their expectations about their future financial conditions and economic conditions in Cyprus.
However, in December, consumers’ intentions to make major purchases weakened further, falling to their lowest point since April.