A further weakening of the business climate in Cyprus’s services sector led to a decline in overall economic sentiment in May 2025. According to the Economic Sentiment Indicator (ESI) published by the Economics Research Centre (CypERC) of the University of Cyprus, the index fell by 1.5 points compared to April.

The ERC’s monthly Business and Consumer Surveys indicate that the drop is primarily due to deteriorating sentiment in the services sector, where assessments of the current situation worsened, and expectations for future turnover were revised downward.

Although the ESI fell to its lowest point in the past eight months, the index remains above its long-term average of 100 points—suggesting that economic conditions in Cyprus remain relatively favorable in the medium term.

In the construction sector, confidence declined slightly despite improved employment expectations, mainly due to more negative evaluations of firms’ current business conditions.

>>Economic Sentiment in Cyprus Worsens in April, Driven by Decline in Services Sector<<

In contrast, retail trade sentiment remained stable at April levels. Lower sales expectations were balanced by improved assessments of the current situation.

In manufacturing, sentiment improved marginally, supported by upgraded forecasts for production in the next quarter.

Meanwhile, consumer sentiment strengthened slightly, largely due to more favorable views on both recent and expected household financial conditions. However, consumers revised downward their expectations for the national economy.

According to the ERC, the Economic Uncertainty Index declined in May, driven by reduced uncertainty among both businesses and consumers.

The report highlights that business-related uncertainty decreased across all sectors except construction, where uncertainty remained at the relatively low levels recorded in April.

In addition, a significant decline in uncertainty was observed among low-income households, contributing further to the overall easing of economic uncertainty.