Key economic indicator records positive y-o-y growth

The Cyprus Composite Leading Economic Index (CCLEI) recorded a positive year-over-year growth rate of 1.4% in March 2023, reversing the negative overview that followed annual decreases of 0.5% and 2.9% in February and January, respectively.

According to the Economics Research Centre (ERC) of the University of Cyprus: “The positive year-over-year growth rate of the CCLEI in March 2023 reinforces the economic forecasts for 2023 according to which the Cypriot economy will not enter a recession and will record a growth rate significantly higher than the average growth rate of the Eurozone, despite the remaining international economic and geopolitical uncertainty.”

It said the leading variables include Brent Crude oil prices, the Economic Sentiment Indicator (ESI) in Cyprus and the euro area, the total number of property sales contracts, tourist arrivals, the value of credit card transactions, the retail trade sales turnover volume index, and the volume index of electricity production.

More specifically, the ERC notes that the international price of Brent Crude contributed to the rise of the CCLEI, whose year-over-year growth rate for the third consecutive month was negative. Also, tourist arrivals to the island seem to be significant with the passenger arrivals in March 2023 approaching the March 2019 passenger arrivals. Moreover, the acceleration recorded in the growth rate of the remaining domestic components further strengthens the increase of the CCLEI.

The ERC concludes that, while the Economic Sentiment Indictor (ESI) in Cyprus strengthened in March 2023 compared to March 2022, the ESI in the euro area decreased reflecting the remaining international economic and geopolitical uncertainty and restraining the upward trend of the CCLEI.

What is a Composite Leading Economic Index (CLEI)?

The CLEI Index 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 Ιndex 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.

What are the components of the Cyprus Composite Leading Economic Index (CCLEI)?

The leading variables have been selected from a large pool of domestic and international leading indicators and are: the Brent Crude oil price, the Economic Sentiment Indicator (ESI) in Cyprus and the euro area, the total number of property sales contracts, the tourists’ arrivals, the value of credit card transactions, the retail trade sales turnover volume index, and the volume index of electricity production.