Cypriot businesses are continuing to invest, innovate, and remain resilient in the face of geopolitical tensions and global trade disruptions, according to the latest European Investment Bank (EIB) investment survey for Cyprus.
The survey found that investment activity in Cyprus remains strong, with almost all businesses making investments, primarily focusing on innovation, even though the overall business climate is more cautious compared to the EU average.
“Cypriot businesses continue to invest, digitalise, and strengthen their resilience, even in this difficult global environment,” said EIB Vice-President Marek Mora.
“The growing use of artificial intelligence and the steady commitment to innovation are clear signs of a private sector with a future-oriented focus,” he added.
Mora also said that “the EIB is ready to support Cypriot companies as they innovate, upgrade, and contribute to the competitiveness of Europe”.
A total of 94 per cent of Cypriot businesses made investments in the last financial year, a figure that is up from 2024 and significantly higher than the EU average of 86 per cent.
Furthermore, 10 per cent of businesses expect to increase their investments in the current financial year, again exceeding the EU average of 4 per cent.
Investment levels remain high across all sectors, with at least 92 per cent of businesses investing, although the majority of investments concern the replacement of existing equipment, at 54 per cent.
In addition, fewer businesses are investing in production capacity expansion compared to the EU.
What is more, Cypriot firms are among the most active international trade players in the EU, with 81 per cent engaging in cross-border trade, and service businesses showing the highest rate of international commercial activity at 95 per cent.
The survey also mentioned that supply chain pressures have significantly eased, with the percentage of businesses reporting difficulties falling from 41 per cent to 20 per cent, as they have increased inventories and diversified their import sources, ensuring much easier access to raw materials and essential goods than last year.
However, businesses remain concerned about changes in tariffs, compliance with new regulations, and fluctuations in transport costs.
Digitalisation and the adoption of artificial intelligence continue to expand, with 23 per cent of businesses making systematic use of generative AI tools, mainly for internal processes, at 75 per cent, product development, at 41 per cent, and customer service, at 39 per cent.
Despite the growth in AI use, the use of multiple digital technologies remains lower than the EU average, at 32 per cent versus 51 per cent, yet Cyprus stands out in innovation, as one in two businesses invests in new products, processes, or services, a rate that far exceeds the European average of 32 per cent.
On climate action, Cypriot businesses are less concerned about physical risks compared to EU businesses, at 60 per cent versus 68 per cent, and over half, 52 per cent, believe they will not be significantly affected by stricter environmental regulations.
While 69 per cent of firms have taken some measures to reduce emissions, primarily through waste reduction and recycling, only a few have conducted energy audits, at 44 per cent, or developed adaptation strategies, at 10 per cent.
The adoption of greenhouse gas emissions targets remains limited at 20 per cent, compared to 47 per cent in the EU.
“The Investment Survey offers a clear picture of how businesses in Cyprus and across Europe are adapting to technological, geopolitical, and climate pressures,” said EIB Chief Economist Debora Revoltella.
“For Cyprus, the challenge now is to turn the green transition from a perceived risk into a long-term opportunity for innovation and competitiveness,” Revoltella added.
She also said that “the survey helps policymakers understand where support can have the greatest impact”.
Key obstacles to investment remain the shortages of skilled personnel, at 89 per cent, high energy costs, at 87 per cent, uncertainty about the future, at 84 per cent, and labour regulations, at 82 per cent.
What is more, infrastructure poses a greater challenge in Cyprus compared to the EU, particularly in the transport sector, at 74 per cent versus 45 per cent, and digital networks, at 70 per cent versus 44 per cent.
Despite these challenges, access to financing has significantly improved.
The percentage of businesses facing financing constraints dropping to 6.8 per cent, the lowest level since 2019, and businesses reporting an improvement in the availability of external financing compared to the EU.
In terms of gender equality, 42 per cent of businesses have at least 40 per cent women in senior management positions.
Moreover, 22 per cent have women as the majority in ownership, figures which are significantly higher than the EU averages.
