Nicosia, December 2025 – The Cypriot economy is presenting a nuanced picture as key barometers point in subtly different directions, according to the latest data from the University of Cyprus’s Economics Research Centre (CypERC). While a composite index forecasting future activity continued its upward trajectory in November, the overall mood among businesses and consumers, as captured by a separate sentiment indicator, experienced a slight retreat. This divergence underscores an economic expansion progressing against a backdrop of sector-specific headwinds and persistent global uncertainties.
The Composite Leading Economic Index (CCLEI), a bellwether for the island’s economic performance in the coming months, recorded a year-on-year increase of 1.8% in November. This marks the third consecutive month of stable growth within a narrow band, following a 1.9% rise in October and a revised 1.8% in September. Analysts at CypERC attribute this sustained positive momentum to several factors: a robust performance in tourist arrivals, resilient retail trade figures, a steady volume of property sales contracts, and a favorable decline in the price of Brent crude oil. Furthermore, an improvement in economic sentiment both domestically and across the broader euro area contributed to the index’s strength. A solitary dampening effect came from a downward trend in temperature-adjusted electricity production.
Conversely, the Economic Sentiment Indicator (ESI-CypERC), which gauges the current confidence of businesses and consumers, dipped marginally to 104.0 points in November, down from 104.1 the previous month. This slight decline interrupts a recent upward trend that saw the indicator climb from 102.1 in September. A detailed sectoral breakdown reveals the cause of the overall softening: a pronounced drop in confidence within the dominant services sector. "The decrease in the Services Confidence Indicator was mainly driven by a deterioration in firms’ views on their recent turnover," the November report stated. This suggests that some service-oriented companies are facing immediate revenue pressures despite the generally positive economic climate.
This sectoral weakness was, however, counterbalanced by broad-based gains elsewhere. Confidence in retail trade strengthened significantly, buoyed by more optimistic assessments of stock levels and sales performance. The construction sector also reported heightened optimism, fueled by improved order books and brighter employment prospects. Industrial firms expressed slightly better views on orders and production expectations, and consumers grew more confident about their personal finances, the national economic outlook, and their willingness to make major purchases. Notably, this rise in consumer confidence contributed to a marked decline in the Economic Uncertainty Indicator, which fell to 10.9 points, its lowest level in recent months.
The authors of the CCLEI report contextualized these developments, noting, "The positive annual growth indicates that the Cypriot economy continues its positive course, although its growth momentum is taking shape in an environment of increased uncertainty and geopolitical tensions." The simultaneous rise of the forward-looking CCLEI and the slight dip in present-day sentiment paints a picture of an economy on a steady growth path, yet one that remains sensitive to disparities between sectors. The resilience in retail, construction, and consumer outlooks provides a solid foundation, but the softness in services highlights vulnerabilities that could stem from shifting demand or operational challenges. As Cyprus moves into the new year, the interplay between these leading and coincident indicators will be closely watched to determine whether the current expansion can broaden its base across all segments of the economy.