Economic uncertainty up in October over Gaza war

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After a relatively elevated but stable period of about six months, economic uncertainty in Cyprus increased again in October due to the war in Gaza, according to a survey conducted by the University of Cyprus.

The Economic Policy Uncertainty (EPU) index compiled by the university’s Economics Research Centre (ERC) rose to 256.63 compared to 202.84 in September.

The EPU index attributed the shift to the recent outbreak of the war between Israel and Gaza in October 7, 2023.

The university survey said this peak is observed in the Cyprus EPU index because of its geographical proximity to the conflict area, contrary to the European EPU index among 11 countries which does not seem to have been affected by the war yet.

The EPU index is based on textual analysis and quantifies economic uncertainty with regard to the efficiency of the economic policies applied.

The UCy Economics Research Centre constructs the corresponding EPU index for Cyprus, and analyses the effects of economic uncertainty on the Cypriot economy.

The editors of the survey found that uncertainty in Cyprus until 2007 was on average lower and less volatile, while after 2008 it started increasing, with the higher peaks being recorded in 2012 due to the banking crisis, in 2020 due to the Covid-19 pandemic, and in 2022 due to the Russia-Ukraine war.