Worsening economic sentiment driven by weaker services sector

In February, Cyprus’ economic sentiment marginally slipped with the Economic Sentiment Indicator (ESI-CypERC) decreasing by 0.1 point from the month before due to weaker business confidence in services.

The index now stands at 78.5 from 78.4 in January. Still, it fell a massive 32.8 points a year ago when in February 2020, the ESI-CypERC was at 111.3.

According to the Business and Consumer Surveys of the University of Cyprus Economics Research Centre, the decrease in the Services Confidence Indicator resulted from firms’ less favourable views on their past business situation and demand, despite improved demand expectations.

The Retail Trade Confidence Indicator declined marginally due to downward revisions in sales expectations, despite more favourable views on recent sales.

Since last November, these sectors were affected by the second national lockdown in January and other COVID-19 restrictions enforced.

Retail shops reopened on 8 February, but hospitality remains shut, with only delivery or takeaway allowed.

The Construction Confidence Indicator remained unchanged as improved assessments of order book levels were offset by downward revisions in employment expectations.

A marginal decrease in the Industry Confidence Indicator was mainly due to more pessimistic production expectations.

The small improvement in the Consumer Confidence Indicator resulted from upward revisions in consumers’ expectations about their financial conditions and Cyprus’ economic environment over the next 12 months.