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Rapid Boost In European AI Adoption Highlights Cyprus’ Challenges

According to recent data from Eurostat, artificial intelligence adoption among European enterprises reached new heights in 2025. However, while the European Union continues to witness remarkable progress, Cyprus remains notably behind the continental average.

EU Growth Momentum

Across the bloc, approximately 20 percent of enterprises with at least 10 employees implemented AI technologies in 2025. This strong 6.5 percentage point increase from 13.5 percent in 2024 underscores the accelerating momentum among businesses in embracing digital tools to drive innovation and efficiency.

Cyprus’ Lagging Performance

Despite steady improvements over the past four years, Cyprus recorded an AI adoption rate of only 9.27 percent in 2025, significantly lower than the EU-27 average of 19.95 percent. This gap of more than 10 percentage points positions Cyprus just above countries like Greece, Bulgaria, Poland, Turkey (7.41 percent), and Romania, thereby highlighting a persistent challenge for Cypriot enterprises.

Historical Perspective And Comparative Analysis

In 2021, Cyprus’ AI adoption was a modest 2.59 percent, compared to an EU-27 average of 7.65 percent. Although by 2023 Cyprus had increased its rate to 4.67 percent—with the EU average at 8.06 percent—the disparity remained evident. By 2024, as the EU surged to 13.48 percent and Cyprus reached 7.90 percent, the performance gap widened further. In 2025, despite Cyprus more than tripling its 2021 rate, the divide continued to grow.

Country Leaders And Innovative Trends

The data reveals stark contrasts among EU nations. Leaders such as Denmark, Finland, and Sweden reported adoption rates of 42.0 percent, 37.8 percent, and 35.0 percent respectively. Meanwhile, nations like Romania (5.2 percent), Poland (8.4 percent), and Bulgaria (8.5 percent) trailed behind, with Cyprus falling just above these lower figures. Additionally, nearly all EU countries reported increases in AI usage, with Denmark, Finland, and Lithuania registering the most significant gains.

Key Applications Driving Adoption

The analysis further indicates that the most common application of AI was in analyzing written language, used by 11.8 percent of businesses. This was followed by generating multimedia content (9.5 percent), creating written or spoken language (8.8 percent), and converting spoken language into machine-readable formats (7.2 percent). Notably, the analysis of written language experienced the fastest growth compared to 2024, increasing by 4.9 percentage points.

This trend clearly demonstrates AI’s transition from a nascent technology to an integral component of business strategy across Europe, even as some markets like Cyprus continue to grapple with broader digital integration challenges.

Cyprus Hits Historic Tourism Peak As Overtourism Risks Mount

Record-Breaking Performance In Tourism

Cyprus’ tourism sector achieved unprecedented success in 2025 with record-breaking arrivals and revenues. According to Eurobank analyst Konstantinos Vrachimis, the island’s performance was underpinned by solid real income growth and enhanced market diversification.

Robust Growth In Arrivals And Revenues

Total tourist arrivals reached 4.5 million in 2025, rising 12.2% from 4 million in 2024, with momentum sustained through the final quarter. Tourism receipts for the January–November period climbed to €3.6 billion, marking a 15.3% year-on-year increase that exceeded inflation. The improvement was not driven by volume alone. Average expenditure per visitor increased by 4.6%, while daily spending rose by 9.2%, indicating stronger purchasing power and higher-value tourism activity.

Economic Impact And Diversification Of Source Markets

The stronger performance translated into tangible gains for the broader services economy, lifting real tourism-related income and overall sector turnover. Demand patterns are also shifting. While the United Kingdom remains Cyprus’ largest source market, its relative share has moderated as arrivals from Israel, Germany, Italy, the Czech Republic, the Netherlands, Austria, and Poland have expanded. This gradual diversification reduces dependency on a single market and strengthens resilience against external shocks.

Enhanced Air Connectivity And Seasonal Dynamics

Air connectivity has improved markedly in 2025, with flight volumes expanding substantially compared to 2019. This expansion is driven by increased airline capacity, enhanced route coverage, and more frequent flights, supporting demand during shoulder seasons and reducing overreliance on peak-month flows. Seasonal patterns remain prominent, with arrivals building through the spring and peaking in summer, thereby bolstering employment, fiscal receipts, and corporate earnings across hospitality, transport, and retail sectors.

Structural Risks And Future Considerations

Despite strong headline figures, structural challenges remain. The European Commission’s EU Tourism Dashboard highlights tourism intensity, seasonality, and market concentration as key risk indicators. Cyprus records a high ratio of overnight stays relative to its resident population, signalling potential overtourism pressures. Continued reliance on a limited group of origin markets also exposes the sector to geopolitical uncertainty and sudden demand swings. Seasonal peaks place additional strain on infrastructure, housing availability, labour supply, and natural resources, particularly water.

Strategic Investment And Market Resilience

Vrachimis concludes that sustained growth will depend on targeted investment, product upgrading, and continued market diversification. Strengthening year-round offerings, improving infrastructure capacity, and promoting higher-value experiences can help balance demand while preserving long-term competitiveness. These measures are essential not only to manage overtourism risks but also to ensure tourism remains a stable pillar of Cyprus’ economic development.

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