Cypriot economy buoyed by services and real estate
The Cypriot economy continued its recovery in December, carrying on with the trend of the two previous months, according to a report by the University of Cyprus Economic Research Centre released on Tuesday.
The Cyprus Composite Leading Economic Index (CCLEI), which uses a variety of metrics to provide an early outlook on future economic activity, rose by 14.8 per cent year-on-year in December, reaching a level of 115.7 points overall.
According to the most up-to-date and revisited data, the index had previously recorded yearly increases of 13.7 per cent and 13.1 per cent in November and October respectively.
“The trend of the year-over-year growth rate of the CCLEI during the last quarter of 2021 remains upward,” the report stated.
“Most of the CCLEI’s domestic and international components contribute to its positive year-over-year performance in December 2021,” it added.
Regarding the contributing factors mentioned above, the report notes that the Economic Sentiment Indicator (ESI) both in Cyprus and the eurozone strengthened in December of 2021 when compared to the same month a year before.
This has been attributed to a boost in confidence in all business sectors of the economy, with the services sector showing particular improvement.
In addition, both the performance of the real estate sector, as well as the magnitude of energy generation in December, contributed to the positive performance of the index.
“The high positive year-over-year growth rate of the total number of property sales contracts and the positive year-over-year growth rate of the temperature-adjusted volume of electricity production in December 2021 exert a corresponding positive effect on the CCLEI and domestic economic activity,” the report explained.
Similarly, the volume of credit card transactions also had a positive effect, as did the tourism and retail sectors, with the report noting that “according to preliminary data in December, tourist arrivals and the volume of retail sales continue to yield a positive effect on the CCLEI”.
Conversely, the high cost of fuel, including the price of Brend Crude oil which had a higher price in December of 2021 when compared to the same month a year before, had an adverse effect on the index, restricting its year-on-year growth.
The report concludes by saying that the performance of the index during the final quarter of 2021 reaffirms the recovery of the Cypriot economy, while reiterating that there are still risks that may hinder it in the future.
“Nevertheless, the continued domestic and international restrictive measures to curb the various mutations of the pandemic and their effects are aggravating factors in the short-term prospects of the international and Cypriot economy,” the report stated.