Businesses in Cyprus are more reserved about their prospects for the coming year than their European counterparts, according to research published on Tuesday by the Cyprus Chamber of Commerce and Industry (CCCI).
“Findings in Cyprus, albeit improved since the previous year, are broadly speaking less optimistic than in other European countries,” the CCCI said.
The chamber’s work to gauge the business sentiment in Cyprus was part of a pan-European economic survey spearheaded by the Association of European Chambers of Commerce and Industry.
The survey took into account responses from approximately 52,000 businesses from 26 countries, with 92 per cent of those businesses being small-to-medium sized enterprises (SMEs).
“The Eurochambres Economic Survey 2022 provides a unique insight into the European business community’s expectations for the year ahead on key factors such as investment, business confidence, employment and sales,” the association said.
According to Eurochambres president Christoph Leitl, while the survey found rising confidence for economic recovery during 2022, various risks and threats remain a possibility.
“The findings, gathered by Chambers of Commerce and Industry across Europe, show a lack of skilled workers, affordable access to energy and raw materials, and labour costs as the top challenges businesses expect for 2022,” Leitl said.
One of the key sources of confidence for businesses is the European Union’s €750 billion recovery fund.
The fund aims to boost the European economy while accelerating digitisation and the green transition.
“European businesses play a key role in the successful rollout of the twin transitions and in
pursuing global leadership in their implementation, particularly as Europe is striving to become climate-neutral by 2050,” Leitl said.
“As these measures are being slowly phased out, we need to build back better by supporting SMEs to take advantage of the national recovery and resilience funds and drive the recovery forward,” he added.
Regarding Cyprus, the local Chamber noted that the main consequences of the pandemic include issues in the tourism sector, economic problems resulting from lockdowns and other restrictive measures, as well as changes in consumer behaviour.
Supply chain disruptions and a difficulty to meet loan repayment obligations were also noted as a result of the pandemic.
Future challenges for Cypriot businesses include rising labour costs, skilled labour shortages, access to funding capital, rising energy costs, rising material costs, digitisation and environmental demands.
The above challenges are listed in order of highest priority to lowest priority following rating by Cypriot businesses in the chamber’s survey.
Moreover, according to the survey, 24 per cent of Cypriot businesses expect higher domestic sales in 2022, while 46 per cent expect a similar volume of sales to 2021.
In terms of exports, 45 per cent of Cypriot businesses expect them to decline in 2022, while 31 per cent expect them to stay the same.
Regarding staffing needs, 27 per cent of businesses in Cyprus said they will need more staff in 2022, while 56 per cent said that they don’t expect to need additional employees.
On future investment, 29 per cent of businesses said that they will invest more in 2022, while 48 per cent of businesses expect them to remain stable, lower than the EU average.
Finally, 33 per cent of Cypriot businesses expressed optimism about the coming year, while 48 per cent said that they’re as optimistic about 2022 as they were in 2021.