Economic Uncertainty Surges in Cyprus — Index Hits New High in October

economic uncertainty epu index

Cyprus is facing increased economic uncertainty due to regional conflicts, notably the outbreak between Israel and Gaza in October 2023. The Economic Policy Uncertainty (EPU) index hit a record high of 256.63, reflecting the impact of these conflicts on the nation’s economic stability.

Why Has Economic Uncertainty Increased in Cyprus?

The Economic Uncertainty in Cyprus has risen due to regional conflicts, particularly the outbreak between Israel and Gaza on October 7, 2023. The Economic Policy Uncertainty (EPU) index for Cyprus hit a record high of 256.63 in October, reflecting the nation’s proximity to these disturbances and the resulting impact on its economic stability.

Cyprus has entered a period of increased economic uncertainty, as evidenced by a significant rise in the Economic Policy Uncertainty (EPU) index. In October, the index soared to a new high of 256.63, up from 202.84 the previous month. This data was extracted from the latest report published by the Economic Research Centre at the University of Cyprus (CypERC).

The Impact of Regional Conflicts

The sudden surge in the index is primarily attributed to the recent conflict outbreak between Israel and Gaza on October 7, 2023. Cyprus’s geographical proximity to the area of conflict has exacerbated the sense of economic unpredictability, which is now clearly reflected in the sharp increase in the EPU index.

While Cyprus feels the tremors of nearby conflicts, the broader European EPU index has seemingly remained insulated from these events. This stark contrast underscores how regional disturbances can disproportionately affect the economies of neighboring countries.

Understanding the EPU Index

The EPU index, first introduced by economists Baker, Bloom, and Davis in 2016, aims to quantify economic uncertainty through a systematic textual analysis. By tracking the frequency of newspaper articles that include terms related to the economy, policy, and uncertainty, the index provides an objective measure of economic instability related to policy effectiveness.

CypERC meticulously constructs and monitors Cyprus’s EPU index, providing a valuable tool to understand the country’s economic climate. The EPU graph, with its peaks and troughs, offers a historical view of Cyprus’s economic stability, or the lack thereof. Pre-2008, the index suggested a relatively stable economic environment. However, the narrative shifted post-2008, with noticeable peaks in 2012 during a banking crisis, in 2020 amidst the Covid-19 pandemic, and more recently in 2022, following the Russia-Ukraine conflict.

Regional News and Economic Indicators

  • The Cyprus Post has issued a warning about a rise in phishing scams, suggesting a need for greater vigilance in digital communications.
  • The country is also making headlines for other reasons, including the state of humanitarian corridors and the fluctuating fortunes of cryptocurrency investments.
  • The UK economy is facing its own challenges, as indicated by a decline in retail sales in the same month.

Stay Informed with Cyprus Mail

For those interested in staying up-to-date with events and issues ranging from local to global importance, the Cyprus Mail offers comprehensive coverage. Readers can explore a variety of topics including:

  • Crime and legal affairs in Cyprus
  • The ongoing Cyprus Talks
  • Developments in education and a guide to local schools
  • Housing and environmental concerns
  • In-depth opinions and columns
  • A global perspective with news from Africa, the Americas, Asia, Europe, the Middle East, and more
  • Business, finance, and sports updates
  • Lifestyle features on entertainment, health, fashion, and travel

Your Online Experience and Privacy

Cyprus Mail’s website, like most professional sites, employs cookies to enhance user experience. These cookies are designed to retain user preferences and provide anonymized tracking data to third-party applications like Google Analytics. While users can control cookie settings through their browser, disabling cookies may affect the website’s functionality.

The site takes measures to protect visitor privacy, using IP addresses and browser types for site analysis without revealing individual identities. By continuing to use the Cyprus Mail’s website, visitors consent to the use of cookies and similar technologies. For those seeking further clarification or wishing to express concerns, the Cyprus Mail’s team is available via email.

Quick Recap

About The Author

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top