cyprus business — cyprus business — Cypriot businesses are demonstrating remarkable investment activity, according to the latest European Investment Bank (EIB) survey. This survey reveals that despite geopolitical tensions and global trade disruptions, firms in Cyprus are focusing on innovation and resilience.
The EIB’s findings indicate that a staggering 94 per cent of businesses in Cyprus made investments in the last financial year, surpassing the EU average of 86 per cent. Moreover, 10 per cent of businesses anticipate increasing their investments this financial year, significantly higher than the EU average of 4 per cent.
Investment levels are robust across various sectors, with at least 92 per cent of firms engaging in investment activities. Notably, 54 per cent of these investments are directed towards replacing existing equipment, highlighting a focus on maintaining operational efficiency. However, fewer businesses are looking to expand production capacity compared to their EU counterparts.
Cypriot firms are also recognised for their active involvement in international trade, with 81 per cent engaged in cross-border transactions. Service-oriented businesses lead the way, boasting a striking 95 per cent participation rate in international trade.
Interestingly, the survey notes a significant easing of supply chain pressures. The percentage of businesses reporting difficulties has dropped from 41 per cent to 20 per cent, attributed to increased inventories and diversified import sources. This proactive approach has facilitated smoother access to essential goods compared to the previous year.
However, concerns remain regarding changes in tariffs, new compliance regulations, and fluctuations in transport costs, indicating that while optimism prevails, challenges are still present. Digitalisation is a key focus area, with 23 per cent of businesses utilising generative AI tools, primarily for internal processes (75 per cent), product development (41 per cent), and customer service (39 per cent).
Despite the growth in AI adoption, the utilisation of multiple digital technologies lags behind the EU average, standing at 32 per cent compared to 51 per cent. Nevertheless, innovation remains a strong point, as half of the businesses are investing in new products, processes, or services, far exceeding the European average of 32 per cent.
On the environmental front, Cypriot businesses exhibit less concern about physical risks compared to their EU counterparts, with 60 per cent expressing worry about climate impacts, versus 68 per cent in the EU. Additionally, over half of the firms (52 per cent) believe they will not be significantly affected by stricter environmental regulations.
Measures to reduce emissions are being implemented by 69 per cent of businesses, focusing on waste reduction and recycling. However, only 44 per cent have conducted energy audits, and a mere 10 per cent have developed strategies for adaptation. The establishment of greenhouse gas emissions targets is limited, with only 20 per cent of firms adopting such goals, compared to 47 per cent across the EU.
The EIB Chief Economist, Debora Revoltella, commented on the survey’s findings, stating, “The Investment Survey offers a clear picture of how businesses in Cyprus and across Europe are adapting to technological, geopolitical, and climate pressures.” She added that the challenge for Cyprus lies in converting the green transition from a perceived risk into a long-term opportunity for innovation and competitiveness.
Key obstacles to investment persist, including a shortage of skilled personnel (89 per cent), high energy costs (87 per cent), uncertainty about the future (84 per cent), and labour regulations (82 per cent). Infrastructure challenges are more pronounced in Cyprus than in the EU, particularly regarding transport (74 per cent versus 45 per cent) and digital networks (70 per cent versus 44 per cent).
Despite these challenges, access to financing has improved, with the percentage of businesses facing financing constraints dropping to 6.8 per cent, the lowest since 2019. Businesses are reporting an enhanced availability of external financing relative to the EU.
In terms of gender equality, 42 per cent of businesses have at least 40 per cent women in senior management roles, and 22 per cent have women as the majority of owners, figures significantly higher than the EU averages.
