Half of Cyprus businesses (51%) are planning to invest less due to the pandemic with investment in Q2 2020, 34% below pre-COVID-19 levels, according to the annual European Investment Bank’s Investment Survey (EIBIS).
The survey said around three in 10 (29%) firms, with investment plans for the current financial year, will abandon or delay at least some of their investments as a result of COVID-19, in line with the EU average (35%).
A share of Cyprus firms planning to continue with a reduced scale/scope is in line with the EU average (21% versus 18%).
The most often cited long-term impact of COVID-19 is the increased use of digital technologies (55%).
Manufacturing firms are the least likely to cite this as a long term impact (29%).
More than seven in ten firms believe their investment over the last three years was about the right amount (72%), in line with EIBIS 2019 (73%) but below the EU average (80%).
Two-thirds of firms in Cyprus (66%) were operating at or above full capacity in 2019, broadly in line with EIBIS 2019 and the EU average (57% and 61% respectively).
Around one-third of all firms (33%) claim to have developed or introduced new products, processes or services as part of their investment activities.
This includes 15% of firms claiming innovations new to the country or global market.
Just over half of firms in Cyprus (54%) have implemented, either fully or partially, at least one digital technology, below the EU average (63%).
Firms in Cyprus are less optimistic about the overall economic climate compared to EIBIS 2019 (-68% versus +6%) and are now well below the EU net balance (-56%).
The proportion of firms in Cyprus citing long term barriers to their investment activities is higher than the EU average on almost every measure.
It said the availability of skilled staff (89%) is seen as a barrier by an increasing number of firms, up eight percentage points on EIBIS 2019.
Whilst availability of finance (61%) is now perceived much less of a barrier than in 2019 (73%) it remains well above the EU average (48%).
The survey said internal funds accounted for the highest share of investment funding (65%), in line with EIBIS 2019 and the EU average (61% and 62% respectively).
Nine in 10 firms in Cyprus (90%) reported generating a profit in the last financial year 2019, broadly in line with EIBIS 2019 (83%) but above the EU average (80%).
“Firms that were using external finance in 2019 are on balance satisfied with the amount, cost, maturity, collateral and type of finance received.
“The highest levels of dissatisfaction recorded among firms in Cyprus is with the collateral requirements (7%).
“One in 10 firms in Cyprus (10%) could be considered as external finance constrained in 2019, above the EU average (6%).”
According to the survey, the share of firms that have invested in measures to improve their energy efficiency (38%) is in line with EIBIS 2019 (42%) but is below the EU average (47%).
The average share of investment in measures to improve energy efficiency by firms in Cyprus is in line with the EU average (13% versus 12%).
Almost a quarter of firms (24%) feel their business has been majorly impacted by climate change and changes in weather patterns, two in five (41%) reported a minor impact.
These levels are in line with the EU average (23% and 35% respectively).
Firms in Cyprus are expecting the transition towards a low-carbon economy to be positive for their reputation (+16%), but impact on their supply chain (-6%) and market demand (-12%) in the next five years.
Over half of all firms in Cyprus (53%) have already invested or plan to invest in the next three years in measures to tackle climate change and reduce carbon emissions.
This is below the EU average (67%).
