Businesses still feeling heat from war in Ukraine

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Business owners in Cyprus are still worried over the growing impact the war in Ukraine is having on the island’s economy, a business to business (B2B) survey carried out by the employers’ lobby group has found.

Seven out of ten (68%) businesses interviewed for the survey said they are primarily concerned over the impact of hiking costs of raw materials and energy, as the war continues to inflate electricity bills.

Nine out of ten noted that they have felt the heat from the increase in energy costs, with 75% expecting to see prices go up even higher before the end of the year, according to the Federation of Employers and Industrialists (OEB) survey.

When it comes to the cost of purchasing raw materials, the survey found eight in ten businesses (81%) reported that it has increased even compared to last year’s already inflated rate.

The second biggest worry is the lack of human resources at 49%, followed by the lack of liquidity (43%), as many see their turnover taking a blow in the first half of the year.

Four out of ten businesses (41%) said that they have seen their turnover shrink in the first half of the year, compared to the same period last year. A third or 33% of businesses asked, said that their turnover has remained the same, with just 24% reporting that they saw an increase.

 An OEB representative said during the presentation of the survey’s findings that the majority of businesses reporting an increase in turnover are in the retail sector, namely supermarkets. Some hotels have also reported an increase in their business.

According to businesses’ forecasts for their turnover over the next six months, only 28% expected to see their business grow.

Three out ten businesses said that they expected their turnover to remain the same, while 34% expected to see their business shrink by the end of the year.

Also, 30% of businesses said that it would remain the same, 34% that it would show a decrease and 28% an increase.

A slightly different trend is recorded in the forecasts for the profitability of the business, with 42% stating that they expect it to remain the same, 37% to decrease and 11% to increase.

Not satisfied with government

Just one out of ten businesses (11%) reported that they were happy with government support packages, and two out of ten (23%) said that measures helped ‘enough’.

The majority of businesses appeared dissatisfied with aid from the state, as 43% said that measures did not help at all, while 23% said that they helped a little.

A large percentage of Cyprus businesses said that they are lost at sea, uncertain of what the future holds, as 41% of companies have no plan of action for the coming six months.

A further 27% of businesses said that they would be focusing on introducing new products and services to the market, with 19% saying that they would be throwing themselves into promotion campaigns.

Some 18% of businesses said that they would be looking for ways to cut down operating costs.

Asked what businesses expect from the authorities, 76% said that they would like to see the introduction of incentive schemes and the reduction of red tape in their transactions.

The survey was conducted by CMRC Cypronetwork Ltd, on behalf of OEB, with the participation of 252 Cypriot businesses.