In August 2024, economic sentiment in Cyprus saw an improvement, with the Economic Sentiment Indicator (ESI-CypERC) rising by 1.5 points compared to July, according to the Economics Research Centre (CypERC) of the University of Cyprus.

This increase in the ESI-CypERC was primarily driven by stronger business confidence across the services, construction, and manufacturing sectors. The rise in the Services Confidence Indicator was largely due to firms' more positive assessments of their recent and expected turnover. Conversely, the Retail Trade Confidence Indicator experienced a slight decline, influenced by firms' more negative views on recent and anticipated sales as well as stock levels. Notably, the Construction Confidence Indicator increased for the second consecutive month, with continued improvement in its components.

In August, firms expressed more favorable assessments of their current order books and revised their employment expectations upward.

The Industry Confidence Indicator also saw a boost, mainly due to firms' upward revisions in production expectations, according to CypERC.

However, the Consumer Confidence Indicator decreased in August as its components deteriorated. Consumers reported a worsening of their recent and expected financial situations, and their outlook on the general economic conditions in the country declined. Additionally, consumers' intentions to make major purchases weakened.

The improvement in economic confidence in August was accompanied by a marked increase in uncertainty. The Economic Uncertainty Indicator for Cyprus rose significantly in August, driven by both external and domestic factors. Key contributors to this heightened uncertainty included ongoing geopolitical tensions, particularly in the Middle East, high volatility in international markets reflecting concerns over global economic activity, and setbacks in major investment projects in Cyprus, especially those related to energy infrastructure.