Further improvement in the economic sentiment was recorded in May 2017 in yet another sign that the economy is improving and stabilising, with growth expected to remain positive in the coming quarters.

Specifically, according to research conducted by the Centre for Economic Research of the University of Cyprus the Economic Climate Index increased by 2.3 points in May compared to April 2-17. This is partly due to the improvement in the retail trade as well as consumer confidence.

Increase in Bank Deposits

In yet another clear sign of the overall improvement and stability of the Cyprus economy, in April 2017 bank deposits have increased for the 12thmonth in a row, showing an increase of 6.4% on an annual basis, equal to €3.31 billion.

Significantly, household deposits displayed an increase of €49.8 million, to reach a total of €23.18 billion.

Decrease in Loans

According to data by the Central Bank, in April 2017 total loans showed a net decrease of €91.6 million. On an annual basis, the total loan amount fell by 5% or €2.77 billion.

A decrease in loans was recorded both for loans from residents of third countries and quite importantly by residents of Cyprus and EU Member States.

The total amount of loans of Cyprus residents decreased by €73.8 million to reach a total of €45.07 billion.

Household loans fell by €43.8 million to reach €20.57 billion.

The highest recorded level of domestic household loans was recorded in December 2012 and reached a total of €23.85 billion, representing a decrease of around €3.28 billion.

The increase in bank deposits by local households and the decrease in loans by Cyprus residents is a clear sign of the improvement of the economy which is expected to show further signs of development, growth and stability in the coming quarters.

Such developments have prompted credit rating agency DBRS to upgrade the Republic of Cyprus’s long-term foreign and local currency issuer ratings from B to BB and change the trend from Positive to Stable. It is widely expected that the fiscal reforms adopted in the last two years will help maintain a sound budget position.