Cypriot entrepreneurs increasingly pessimistic

The uncertainty due to external factors, mainly ongoing wars in Ukraine and Israel, as well as recent attacks by the Houthis on commercial ships in the Red Sea, has made Cypriot entrepreneurs more pessimistic.

This comes as a result of the deterioration of the economic climate in December, as announced yesterday by the Center for Economic Research at the University of Cyprus, disclosing the latest economic sentiment survey.

Specifically, in December 2023, the economic climate worsened, with the Economic Sentiment Index (ESI) decreasing by 4.6 points compared to November.

The decline in the Economic Sentiment Index, according to the announcement, is attributed to the weakening of the business climate mainly in services and, to a lesser extent, in construction.

According to the Center for Economic Research (CER) at the University of Cyprus, the decline in the services sector resulted from a significant deterioration in assessments of the current economic situation of businesses and the business cycle.

Businesses in the construction sector negatively assessed their ongoing projects and revised downward estimates for the number of employees, leading to a deterioration in the climate in the sector.

In December, the business climate in retail trade and manufacturing did not show a significant change compared to November.

In contrast to the business climate, consumer confidence strengthened in December, as consumers evaluated less negatively the current and future economic situation of their households and the country.

However, the Economic Uncertainty Index increased in December, mainly due to increased uncertainty among businesses in the services sector.

Specifically, the Economic Uncertainty Index in December 2023 sharply returned to the level of December 2022, although it fluctuated at relatively low levels during the past year.

In conclusion, as summarized by the CER, in December 2023, the Economic Sentiment Index slightly fell below the level of December 2022 but remains above its long-term average (100 points), indicating that economic conditions in Cyprus are still favorable, but challenges that increase uncertainty, especially in the largest sector of the economy, services, exist.

However, the de-escalation of inflation continues, as in December 2023, the expectations of businesses and consumers for the price trend fell much lower than December 2022 levels.