Negative annual growth rate for Cyprus’s Leading Economic Index (LEI) was recorded in March, showing an annual decline of 0.9% following a 0.6% decrease in February and a 0.2% increase in January 2024, respectively, according to recent and revised data.
According to estimates by the University of Cyprus’s Economic Research Centre (ERC), which constructed the index, international developments and uncertainties inevitably contributed to the LEI’s decline in March 2024.
As stated in a related press release by the ERC, the ongoing conflict between Russia and Ukraine and continuing military conflicts in the Middle East exacerbate international uncertainty, with uncertainty in Cyprus escalating significantly in March 2024 compared to March 2023.
As a result, negative annual growth rates were recorded for Economic Climate Index (ECI) both in the euro area and in Cyprus in March 2024, with the deterioration of Cyprus’s ECI annual growth rate surpassing that of the euro area.
Contributing to the negative annual growth rate of the LEI in March are also the negative annual growth rate of property sales documents and the international Brent Crude oil price, which, for the first time since December 2022, shows an increase in its annual growth rate.
“Although the growth of other domestic components of the LEI mitigates the decline in the LEI in March, the recent flare-up in the Middle East exacerbates uncertainty and may affect oil prices and inflation, thus impacting the short-term growth of the LEI,” it is stated.
In conclusion, it is mentioned that the growth of the LEI and the prospects for the development of the Cypriot economy depend largely on the international economic and geopolitical environment, with the annual growth rate of the LEI showing a decline in March 2024.
