Cyprus Mail 11 March 2021 - by Andrew Rosenbaum
The Cyprus economy has slowed as businesses and consumers await the full rollout of vaccines which should mean an end to restrictions that are limiting economic activity, according to a report from the Centre for Economic Research at the University of Cyprus.
However, nearly all economists forecast an increase in activity once the vaccine rollout is complete, and demand, which has been pent up for some time, increases.
The Composite Leading Economic Index (CPI) of Cyprus saw a decrease of 4.8 per cent in February 2021 from the same period in the previous year, reaching a reading of 102.9. There was a decrease of nearly the same size, 5.1 per cent in January, and a slightly smaller one of 4.3 per cent in December 2020.
The decrease in February 2021 reflects the economic impact of prolonged restrictive measures to curb the spread of the coronavirus. The tougher restraint measures taken since the beginning of January on the domestic economy continued to adversely affect most of its sectors.
In particular, preliminary data indicate declines in January, and especially in February 2021, for the volume of electricity production for the same period in the previous year.
Retail sales, which jumped in December 2020, have fallen back into a decline, according to the report. And the number of real estate sales in February 2021 as well as the tourist arrivals continued to decrease. The overall decrease of the index was also driven by increases in oil prices.
In contrast, the improvement of the Economic Climate Index (ECI) in the euro area, including Cyprus, in January and February 2021, as well as the increase in the number of credit card transactions from the previous year did offset a worse decline.
The future movement of the index lies in the evolution of the pandemic, which affects domestic and international economic activity. A small increase in economic activity should come with the relaxing of restrictions in March, along with the freeing up of consumers as the vaccine is administered.
