The real economy seems to be adapting to the new reality of war, but uncertainty is present, making growth momentum particularly fragile.
This emerges from the latest economic situation survey prepared by the Center for Economic Research of the University of Cyprus. In April, the economic climate in Cyprus improved, with the Economic Situation Index (CCI) increasing by 2.8 points compared to March 2022. The increase in the CCP was due to the strengthening of the business climate in the services, retail and Manufacturing.
The Economic Uncertainty Index also declined in April. In particular, uncertainty decreased in services, construction and manufacturing, as well as among consumers, while it increased further in retail.
“After the big drop in the DOS in March, the index is slightly above its long-term average (100 points), indicating a weakening of growth prospects. However, the conditions for economic activity seem to remain favorable, although they are characterized by increased uncertainty “, it is emphasized in the commentary of the research results.
< p>The strengthening of the climate in services and manufacturing was the result of more favorable assessments of companies for their current situation, as well as more optimistic assessments of their activity in the next quarter. The retail climate has improved due to upward sales revisions over the coming quarter.
The construction sector is the only one does not see an improvement in economic conditions.
In the construction sector, the business climate has deteriorated due to the deteriorating current situation and expectations. Compared to March, the evaluations of the companies regarding their activity in the last quarter and their ongoing projects were more negative. In addition, companies' estimates of their number of employees over the next quarter were more pessimistic. Expectations for sales prices in the construction sector were revised upwards, with the vast majority of companies saying that they will increase sales prices in the next quarter.
The climate among consumers in April remained unchanged at the negative levels of March. Compared to March, consumer responses to the recent economic situation, both of their households and of the country in general, were more unfavorable. Consumer estimates for the future financial situation of their households remained close to negative levels in March. On the contrary, consumers revised upwards their expectations for the future economic situation of Cyprus and appeared less pessimistic, than in March, about labor market conditions.
In terms of Inflation and prices, consumer perceptions of price trends over the past 12 months reflect a strengthening of upward trends. Expectations for price developments over the next 12 months, although slightly revised downwards, remain very high, indicating continued upward pressure on consumer prices.
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