Economic sentiment deteriorates during lockdown

A second lockdown in January saw economic sentiment in Cyprus deteriorate with confidence shaken by the closure of non-essential shops and businesses.

The University of Cyprus Economic Sentiment Indicator (ESI-CypERC) decreased by 5.2 points in January compared with December 2020 due to the new three-week lockdown.

The index now stands at 78.5 from 83.7 in December but has fallen a huge 33.3 points on a year ago when in January 2020 the ESI-CypERC was at 111.8.

According to the University’s Economic Research Centre, the index drop resulted from a weakening of economic confidence among businesses and consumers.

The drop in the Services Confidence Indicator was driven by a deterioration in all of its components, namely past business situation, past turnover and demand expectations.

The Retail Trade Confidence Indicator decreased due to less favourable views on recent sales and stock volumes, despite upward revisions in sales expectations.

The Construction Confidence Indicator declined as firms gave more negative assessments of the levels of order books and revised their employment expectations downwards.

The decrease in the Industry Confidence Indicator resulted from unfavourable views on the stocks of finished products and more pessimistic production expectations, despite improved assessments of the current levels of order books.

Consumers’ expectations about their financial conditions in Cyprus were revised downwards, resulting in a drop in the Consumer Confidence Indicator, despite stronger intentions for making major purchases.