The Cypriot economy is entering the new year with a renewed sense of confidence. According to the latest findings from the Economics Research Centre (ERC) of the University of Cyprus, December 2025 saw a significant boost in the national economic climate, fueled by resilient services and a newfound wave of consumer optimism.
The Economic Sentiment Indicator (ESI-CypERC) climbed by 1.6 points this December, marking a strong finish to the fiscal year. This upward shift was primarily anchored by a more positive outlook in the services and retail sectors, alongside a substantial jump in household confidence.
Sectoral Performance: Retail and Services Lead the Charge
While some industries remained steady, the “engines” of the Cypriot economy—services and trade—showed clear signs of vitality.
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Services: Business owners reported a better immediate business environment and higher turnover. While expectations for future turnover dipped slightly, the current strength was enough to pull the overall confidence indicator higher.
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Retail Trade: Confidence grew for the second month in a row. This was driven largely by retailers’ revised, more ambitious sales targets for the early months of 2026.
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Stagnant Sectors: Both Construction and Manufacturing (Industry) remained at their November levels. In construction, a drop in hiring expectations was balanced out by healthier order books. Similarly, industrial firms saw better orders but expressed concern over weakening production expectations and stock levels.
The “Consumer Effect”: Big Purchases on the Horizon
The most striking development in the December report was the “marked strengthening” of consumer sentiment. Cypriot households appear increasingly ready to open their wallets as they head into 2026.
Key Consumer Trends:
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Major Purchase Intentions: There is a notable rise in the number of citizens planning significant investments or high-value acquisitions.
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Personal Finances: Assessments of individual household wealth and stability continued to trend upward.
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National Outlook: Perhaps most importantly, expectations regarding the broader economic health of the Republic of Cyprus showed significant improvement.
Vanishing Uncertainty
In a further sign of stabilization, the Economic Uncertainty Indicator for Cyprus fell for the third consecutive month. This decline was broad-based, with lower anxiety reported by consumers as well as decision-makers in the industrial and services sectors. This trend suggests that the market is becoming more predictable, providing a steadier foundation for business planning in the coming year.
Source: Stockwatch.com.cy