Economy on a recovery pace despite inflation and pandemic

The Cyprus Composite Leading Economic Index (CCLEI) recorded a year-over-year increase of 14.8% in January 2022, reaching a level of 109.4 units, after year-over-year increases of 14.4% in December 2021 and 13.8% in November (based on recent and revised data), according to an Economics Research Centre of University of Cyprus press release.

Most of the CCLEI’s domestic and international components contributed to its upward trend in January 2022. In particular, the strengthening of confidence in all business sectors, and especially in the services sector in January 2022 compared to January 2021, strengthened the Economic Sentiment Indicators (ESI) in Cyprus and the euro area, that compose the CCLEI.

Moreover, the total number of property sales contracts and the temperature-adjusted volume of electricity production continue to have a positive effect on the CCLEI, increasing in January 2022 compared to a year ago.

The value of credit card transactions also shows a significant year-over-year increase. Tourist arrivals and the retail sales volume continue to exert a positive effect on the CCLEI and domestic economic activity, according to preliminary data in January.

In contrast, the Brent Crude oil price contributed to the slowing down of the CCLEI’s growth in January, since it marked a significant increase in January 2022 compared to January 2021.

In conclusion, the Cypriot economy will remain on a recovery pace according to the positive year-over-year growth rate of the CCLEI recorded in January 2022, although the rising price of the Brent Crude oil and the continuing challenges of the pandemic continue to be aggravating factors in its short-term development prospects.

The CCLEI Index is compiled by the Economics Research Centre of University of Cyprus in cooperation with Hellenic Bank. It is designed to provide early warning signals for the turning points of business cycles i.e. early evidence of the turns in economic activity. This index comprises of a number of leading economic activity variables whose changes tend to lead the changes in the overall economic activity and which are evaluated on a regular basis.