24.08.2022
According to a report published this week by the Center for Economic Research at the University of Cyprus, external geopolitical uncertainty and soaring inflation continue to weigh on the Cypriot economy, causing a number of key variables of economic activity to decline for the second month in a row.
According to the report, the Cyprus Composite Economic Index (CCLEI) fell by 2.4% year-on-year in July 2022 after a 1.5% year-on-year decline recorded in June 2022 . The month is updated to reflect the most recently revised data.
“The ongoing war between Russia and Ukraine, high inflation and growing uncertainty are reflected in the negative annual growth rate of CCLEI in July 2022,” the report says.
The report notes that Economic Sentiment Indicators (ESI) in both the euro area and Cyprus worsened in July 2022 compared to the same month in 2021. In this regard, a particular decline was observed in the consumption sector, where the climate has weakened significantly. At the same time, the report also takes into account the international price of Brent crude oil, which remained at a high level in July 2022, contributing to a negative growth rate.
The negative impact of the sharp rise in energy prices is also reflected in temperature-adjusted electricity generation, which worsened in July 2022 compared to July 2021.
“On the contrary, most of the internal components of the CCLEI contribute to containing the fall of the CCLEI and therefore the growth of the Cypriot economy, recording an acceleration in growth rates in July 2022 compared to the corresponding month of the previous year, despite the difficult international economic climate,” the report explains, highlighting the impact of external events per country.
“In particular, the growth rate of the total volume of real estate purchase and sale agreements, the volume of credit card transactions, the growth rate of tourist arrivals, and also, according to preliminary data, the volume of retail sales, accelerated,” the report says.
As evidenced by the real estate contribution, property sales in Cyprus reached 1.3 billion euros in the first quarter of 2022 alone, with a total of 5,258 properties sold during that period, according to the land registry report. In addition, property sales in Cyprus grew by 39% year on year in the first six months of 2022.
Finally, the report of the Center for Economic Research states that “the ongoing war between Russia and Ukraine and all the consequences associated with it continue to burden the growth prospects of the international and, by extension, the Cypriot economy.”
