Figure: The Cyprus Composite Leading Economic Index (CCLEI) vis-à-vis the Economic Activity of Cyprus
The Cyprus Composite Leading Economic Inde (CCLEI) recorded a year-over-year increase of 11.3% in Septembe 2021, reaching a level of 114.5, after year-over-year increases of 10.8% in August and 11.0% in July (based on the latest and revised data).
The year-over-year growth rate of CCLEI is recorded positive during the third quarter of 2021. More specifically, according to preliminary data in September, a positive effect on the CCLEI and domestic economic activity is exerted by tourist arrivals and the volume of retail sales during the third quarter of 2021. Moreover, the total number of property sales contracts continues to contribute to the positive year-over-year performance of the CCLEI in September. The same applies to the credit card transactions, whose negative year-over-year growth rate in the previous two months, is reversed. However, it is noted that the reversal of the growth rate of credit card transactions may be due, in part, to the new decree of mandatory use of credit cards in the retail sector. In addition, a positive effect on the CCLEI is exerted by the Economic Sentiment Indicators (ESI) in Cyprus and the euro area, which strengthened in September 2021 compared to September 2020 due to the strengthening of confidence in all business sectors except the construction sector in Cyprus. On the other hand, the negative year-over-year growth rate of the volume of electricity production, as well as the significant year-over-year increase in the Brent crude oil price, contribute to the restraint of the year-over-year growth of the Index in September.
In conclusion, the recording of positive year-over-year growth rates of the CCLEI during the last two quarters of 2021 indicates a path towards the recovery of the Cypriot economy, which, however, continues to depend on the future development of the COVID-19 pandemic. Further information regarding the methodology of constructing the CCLEI can be found at: Cyprus Composite Leading Economic Index (CCLEI)
Notes:
- The CCLEI Index is estimated based on the econometric model of Aruoba, Diebold and Scotti (ADS) (2009).
- The CCLEI for September 2021 is constructed based on the availability of the Brent Crude oil price, the Economic Sentiment Indicator in the euro area and in Cyprus, the total number of property sales contracts, the value of credit card transactions, as well as the high frequency data of the passengers’ arrivals and the volume of electricity production for September, while the retail sales volume is estimated based on the latest available information in a series of various economic indicators.
