In July 2023, economic sentiment in Cyprus deteriorated, as the Economic Sentiment Indicator (ESI-CypERC) decreased by 2.7 points compared with June 2023. The report, issued by the Economics Research Centre of the University of Cyprus, highlights weaker business confidence in the services sector and, to a lesser extent, lower consumer confidence as the main contributors to the overall decline.

The Services Confidence Indicator decreased as all of its components deteriorated. More specifically, firms assessed their past performance (business situation and demand) less favourably and revised their demand expectations downwards.

The Retail Trade Confidence Indicator remained stable at the level reached in June. In July, the improvement in the views on recent sales was offset by the deterioration in the assessments of the current stock levels, while sales expectations stayed largely unchanged.

The increase in the Construction Confidence Indicator was due to more favourable assessments of the level of order books and upward revisions in employment expectations.

The Industry Confidence Indicator improved for the third month in a row. In July, firms’ views on the current levels of order books improved and production expectations continued to pick up; however, firms’ assessments of the stocks of finished products deteriorated.

The Consumer Confidence Indicator decreased, as a result of the downward revisions in consumers’ expectations about the financial situation of their households and the economic conditions in Cyprus. Nevertheless, consumers’ intentions to make major purchases over the next months strengthened in July.

In July, economic uncertainty in Cyprus rose owing to higher uncertainty among consumers and among firms in all sectors, except retail trade.