Ukraine war threatens SMEs suffering pandemic shock

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The war in Ukraine could deliver the final blow to small businesses and hospitality establishments, which have yet to find their bearings following two years of the pandemic.

Shopkeepers and restaurant owners want authorities to step in and support their businesses, arguing the war is hindering their recovery from the coronavirus pandemic while soaring inflation makes matters worse.

In comments to news site Stockwatch, the general secretary of the small shopkeepers’ association POVEK, Stephanos Koursaris, said: “The war in Ukraine combined with the sharp rise in the price of fuel and other essential products have exhausted small and medium-sized enterprises”.

He said the new uncertainty caused by the Russian invasion has a much greater impact on companies whose turnover is based exclusively on tourism.

“If the war drags on, the consequences will be catastrophic as our tourist season will be further delayed.

“Meanwhile, almost everything has become more expensive, and as the cost of raw materials rises, so do the new imported goods, with shopkeepers having to pass on part of the increase to consumers.”

Cyprus has joined an EU flight ban on Russian aircraft, decimating its second-largest tourist market.

Koursaris warned that many businesses would have to suspend their operations.

“Just when things started to get better, as the pandemic subsided, with things looking good for tourism and the retail industry, the war reversed everything.”

Businesses relying on tourism are expected to be hit the most from the war, with Paphos hospitality establishments saying that almost half of the restaurants are on the verge of disaster.

Representing Paphos leisure establishment owners, Philippos Genethliou said that 40% of hospitality venues have yet to reopen after closing two years ago due to COVID restrictions.

He added that Paphos would lose out on tourists from various destinations if the war drags on.

Tourism-reliant businesses in Famagusta are at greater risk from closure.

Representing local shopkeepers, Pambos Alexandrou said: “Some 50% to 60% of local businesses are heavily reliant on Russian and Ukrainian tourists.

“These businesses will not be able to reopen if the war does not come to an end”.

Alexandrou said some businesses in Ayia Napa and Protaras have been forced to close under the crushing weight of rent costs.

“Unfortunately, the state has not come to our aid on the matter of rents during the two years of the pandemic.

“As a result, tens of businesses have shut down, with more to follow.

“A lot of businesses have not reopened since closing in 2019.”