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Decline In Business Loans Amidst Economic Uncertainty

by THEFUTURE.TEAM

July 15, 2024

The latest data from the Central Bank of Cyprus indicates a notable decline in the issuance of new business loans during the first five months of 2024. The reduction is largely attributed to the prevailing high interest rates and overarching economic uncertainties, which have deterred businesses from taking on new debt.

Decrease in Loan Issuance

New business loans amounted to €814 million from January to May 2024, marking a significant drop from €971 million during the same period in 2023, representing a decrease of 16.1%. This downward trend contrasts with the increase in loans to households, which rose by 6% to €556 million, up from €524 million in the previous year.

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Factors Influencing the Decline

The economic environment in Cyprus has been characterised by heightened interest rates, making borrowing more expensive and less attractive for businesses. Additionally, the broader economic uncertainties have prompted companies to adopt a more cautious approach, opting to restructure existing debts rather than seek new loans. The data reflects a broader trend where businesses are focusing on managing their current financial obligations in a volatile economic climate.

Restructuring Over New Borrowing

The preference for debt restructuring over new borrowing is evident from the data. Business loan restructurings decreased to €731.1 million from €951.7 million in 2023. This decline indicates a strategic shift among businesses towards consolidating and managing existing debts instead of expanding their borrowing.

Household Loans on the Rise

In contrast to the business sector, household loans have shown resilience and growth. The increase in household loan issuance suggests a stable demand for personal and residential financing. This growth may be supported by favourable government policies and economic measures aimed at boosting consumer confidence and spending.

Implications and Future Outlook

The decline in business loans could have significant implications for the Cypriot economy. Reduced borrowing can lead to lower investment in business expansion and innovation, potentially impacting economic growth. However, the focus on debt restructuring may lead to healthier balance sheets and more sustainable financial practices in the long run.

UAE Embarks On 2031 National Investment Strategy To Boost Annual Foreign Inflows

by News Editor

March 11, 2025

The UAE has set a bold vision with its National Investment Strategy 2031, targeting an elevation in annual foreign investment inflows from AED112 billion ($30.5 billion) in 2023 to AED240 billion ($65.4 billion) by 2031. His Highness Sheikh Mohammed bin Rashid Al Maktoum highlighted the strategy’s goal to transform the UAE into a premier global investment hub. Aiming to swell the foreign direct investment stock from AED800 billion to AED2.2 trillion, this strategy focuses on key sectors: industry, financial services, transport and logistics, renewable energy, and telecommunications.

Key Initiatives And Economic Contributions

The approved strategy includes 12 new programs and 30 distinct initiatives, such as the Financial Sector Development and the Investment Offices Promotion Incubator. Currently, foreign direct investment contributes significantly to the GDP, with predictions to increase its share to over 30% of the total investments by 2031.

Dive deeper into the global market shifts in Wall Street Tumbles Amid Trade Tensions.

Technological And Digital Advancements

The strategy outlines the UAE’s vision to become a digital economy powerhouse by 2031, intending to enhance the digital economy’s current contribution to GDP from 9.7% to 19.4%. The Industrial Technology Transformation Index (ITTI) will also play a pivotal role in gauging technological advances and sustainability practices.

The introduction of a remote work system and the launch of the National Green Certificates Program further highlight the UAE’s efforts to harness global talent and promote sustainable development.