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Growth rate slows in March – CCLEI survey

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The island’s economy is slowing, with the growth rate turning negative for the second month in a row, according to a leading indicator used to predict the future direction of economic movements in Cyprus.

The Cyprus Composite Leading Economic Index (CCLEI), estimated by the Economics Research Centre (CypERC) of the University of Cyprus, saw a year-over-year decrease of 0.9% in March, following a 0.6% y-o-y decrease in February and a 0.2 increase in January, compared to the same month last year.

The authors of the report said that, “the prevailing international developments and uncertainties inevitably contribute to the CCLEI fall in March.”

“The CCLEI growth and the development prospects of the Cypriot economy are highly dependent on the international economic and geopolitical environment, with the year-over-year CCLEI growth rate noting a decline in March 2024.”

“The ongoing war between Russia and Ukraine and military conflicts in the Middle East exacerbate international uncertainty, with uncertainty in Cyprus escalating significantly in March compared to March 2023,” the CCLEI survey noted.

“As a result, the year-over-year growth rates of the Economic Sentiment Indicators (ESI) in the euro area and in Cyprus in March 2024 are negative, with the deterioration of the year-over-year growth rate of the ESI in Cyprus exceeding that of the ESI in the euro area.

“The negative growth rate is also due to the negative year-over-year growth rate of property sales contracts, as well as the increase in the international Brent crude oil price, which, for the first time since December 2022, shows an escalation in its year-over-year growth rate.

“Although the growth in the remaining domestic components of the CCLEI moderates the drop in the CCLEI in March, the recent flare-up in the Middle East is adding to the uncertainty, and is likely to affect oil prices and inflation, and thus, the CCLEI growth rate in the short term,” the survey concluded.

The CCLEI for March 2024 is estimated based on the availability of the Brent crude oil price, the ESI in the euro area and in Cyprus, the property sales contracts, tourist arrivals, credit card transactions, as well as the high-frequency data of the temperature-adjusted volume of electricity production.

On the other hand, the retail sales volume is estimated based on the latest available information in a series of various economic indicators.

Economic Research Centre (ERC) – Department of Economics, University of Cyprus (UCY)