Financial Mirror (Cyprus)

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.

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