The economy of Cyprus suffered a heavy fall in 2013. Following the crash there was a surge of innovation and investments in local businesses. A survey conducted by the EIB (European Investment Bank) highlighted changes in Investment and Investment Finance for Cyprus in 2017.
The survey displayed that uncertainty, energy costs, regulation, and the lack of skills impede the potential for further investment in Cypriot businesses. But firms based in Cyprus showed resilience which was observed in the recovery of Cypriot economy in 2017.
The services sector is enjoying the largest sum of investments from Cypriot firms with 39% investing in machinery and equipment followed by land, business buildings, and infrastructure at 22% and IT, software, and data enjoying 16% of inward investments. These figures comply to EU-wide findings as well, signifying that Cyprus is keeping up with other European countries.
The differences between Cyprus and other European countries are few, but large. In the last three years, 28% of the firms in Cyprus have reported a lack of investment. Whereas the average investment gap in Europe is 15%, making the Cypriot figure the third largest across the continent.
The other difference is found in nearly half of the firms in Cyprus (42%) that have been reported to operate either at or more than their maximum capacity. The respective EU figure is at 53% of firms operating at or more than their maximum capacity.
From all of the sectors in Cyprus, the EIB has selected to invest mostly in the energy sector in order to assist Cyprus in further development and economic growth and recovery. Until the end of 2017, the EIB has invested a total sum of €333 million in both the public and private sectors, which accounts for 1,8% of Cyprus’ GDP.
Innovation in Cyprus is mostly inwards as 39% of all firms in Cyprus have developed new products, processes, or services as part of their investment strategies. With less than 1% of firms in Cyprus investing globally, local business development just might survive the bearish markets.
With negotiations taking place regarding the potential pipeline running through Cyprus and the gas deals with Noble Energy, there is a great opportunity in the energy sector to boost innovation and foreign direct investment in Cyprus.