Cyprus Composite Leading Economic Index Shows Promise Amidst Year-End Slowdown
The Escalating Military Conflicts Have Inevitably Impacted the Index Throughout the Final Quarter of 2023
The Cyprus Composite Leading Economic Index, as prepared by the Economics Research Centre (CypERC) of the University of Cyprus, has shown positive trends but experienced a slowdown in the last quarter of 2023.
According to a statement by the Centre, the ongoing deceleration of the Index underscores the challenges posed by a strained geopolitical landscape and an unstable economic environment on the prospects for Cyprus’s economic growth.
Specifically, the escalating military conflicts in Israel since October have worsened the already adverse international geopolitical climate, inevitably impacting the Index throughout the final quarter of 2023, as noted in the CypERC’s announcement.
Particularly, the intensification of geopolitical tensions negatively affects the Economic Sentiment Indicator (ESI) in the eurozone, which continued to exhibit a negative annual growth rate in December 2023.
Conversely, the positive annual growth rate of the Index in December can be attributed to both the decline in international oil prices and the growth of various domestic sectors, including real estate, tourism, retail trade, and electricity production.
In December 2023, the Composite Leading Economic Index of Cyprus recorded an annual increase of 1.5%, following annual increases of 1.8% and 1.9% in November and October of 2023, respectively, according to recent and revised data.
The Index is designed to provide early warning signals for turning points in economic cycles, i.e., shifts in economic activity. It comprises a number of leading economic activity variables, which tend to precede changes in overall economic activity and are regularly assessed.
Moreover, it consists of variables selected from a broad category of domestic and international leading indicators. These include the Brent Crude oil price, the Economic Sentiment Indicator (ESI) in Cyprus and the eurozone, total property sales contracts, tourist arrivals, the value of credit card transactions, the retail sales volume index, and the electricity production volume index.
