Business confidence at 3-year high, retail sector stable

Economic sentiment in Cyprus improved slightly in February, as the benchmark Economic Sentiment Indicator (ESI-CypERC) increased by 0.8 points to 109 compared to January’s 108.2 and 108.8 in December.

The increase in the index compiled by the University of Cyprus Economics Research Centre was driven by stronger business confidence in all sectors, except retail trade.

This is the highest reading for the index in three years, but short of the 111.2 recorded in February 2022, when the economy was recovering from the coronavirus pandemic and a long distance to go from the all-time high of 122.3 seen in November 2017. That was double the rate from the all-time low recorded after the banking crisis that saw an economic meltdown in 2012-2013.

The ESI-CypERC for February 2025 saw an increase in the Services Confidence Indicator stemmed from firms’ improved assessments of their turnover performance.

The Retail Trade Confidence Indicator remained stable, as the deterioration in sales expectations was offset by the improvement in views on recent sales.

The Construction Confidence Indicator picked up markedly, because of improved assessments of the current levels of order books and upward revisions in employment expectations.

The Industry Confidence Indicator rose slightly, as firms expressed more favourable views on the current level of order books.

The Consumer Confidence Indicator declined in February for the second consecutive month. Although consumers’ assessments of their recent financial situation improved marginally, consumers’ expectations about their future financial situation and the economic conditions in Cyprus worsened.

However, consumers’ intentions to make major purchases strengthened markedly in February.

The Economic Uncertainty Indicator for Cyprus decreased again in February to 13.7 points from 17.0 in January, owing to further declines in uncertainty levels among firms in the services and construction sectors.