Cyprus spike in economic uncertainty
After a relatively stable six-month period, economic uncertainty in Cyprus experienced a notable surge in October, with the Economic Policy Uncertainty (EPU) index reaching an estimated 256.63, compared to its September value of 202.84.
The Economics Research Center (ERC) at the University of Cyprus, responsible for constructing the EPU index for the country, has been analyzing the impacts of economic uncertainty on the Cypriot economy. The recent shift, outlined in a bulletin, is part of a research program conducted by the ERC in collaboration with the Ministry of Finance of Cyprus.
In a press release, the ERC highlighted that the significant change in October is partially attributed to the recent outbreak of the war between Israel and Gaza on October 7. The spike observed in Cyprus’ EPU index is linked to its geographical proximity to the conflict area, unlike the European EPU index, which appears unaffected by the war thus far.
The ERC had found that uncertainty in Cyprus was relatively lower and less volatile until 2007, with an upward trend post-2008. The highest peaks occurred in 2012 due to the banking crisis, in 2020 amid the pandemic and in 2022 with the war in Ukraine.
