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Service Sector in Cyprus Shows Mixed Performance Across Industries

by THEFUTURE.TEAM

September 9, 2024

The service sector, a vital component of Cyprus’ economy, has shown mixed performance across its various industries, reflecting both opportunities and challenges as the country navigates a post-pandemic economic landscape. The latest data from the Statistical Service of Cyprus highlights significant fluctuations in growth among different sectors within the broader service industry, illustrating the dynamic and evolving nature of this critical part of the economy.

A Diverse Landscape

The service sector in Cyprus encompasses a wide range of industries, including professional services, tourism, transport, communications, and financial services. In recent years, this sector has been a major contributor to the country’s GDP, driving economic growth and employment. However, as recent figures suggest, not all segments of the service industry are progressing at the same pace.

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According to the latest report, some areas of the sector have continued to thrive, while others are struggling to regain momentum. The professional, scientific, and technical services sector, which includes a significant portion of Cyprus’ business services exports, has shown resilience and growth. Meanwhile, industries such as tourism and transport have experienced slower recoveries, weighed down by global economic uncertainties and inflationary pressures impacting consumer behaviour.

Growth in Professional Services

Professional services have emerged as a standout performer within the service sector. The steady growth in this area has been driven by an increasing demand for specialised services, including legal, accounting, and consultancy work. Cyprus has long been recognised as a hub for professional services in the region, attracting international clients due to its favourable business environment and regulatory framework. This segment of the service economy continues to benefit from Cyprus’ strategic location, its highly skilled workforce, and the country’s business-friendly policies.

This positive momentum is also reflected in the growth of the information and communications sector. With technological advancements and increased digitalisation, businesses in Cyprus are increasingly seeking innovative IT solutions and communications services. The demand for these services has seen a significant rise as companies look to optimise their operations and enhance their digital capabilities.

Slower Recovery in Tourism and Transport

In contrast, the tourism and transport sectors have faced a more challenging recovery. Tourism, which is a cornerstone of Cyprus’ economy, is showing signs of improvement but has not yet fully returned to its pre-pandemic strength. Although the number of international visitors is rising, ongoing inflationary pressures and geopolitical uncertainties have dampened the pace of recovery. Similarly, the transport sector, closely tied to tourism, has struggled to regain its former momentum, with rising fuel costs and global supply chain disruptions continuing to affect profitability.

Financial Services in Transition

The financial services sector, another pillar of Cyprus’ service industry, is undergoing a period of transition. While still a key player in the economy, the sector has faced increased regulatory scrutiny and challenges related to global economic conditions. Nevertheless, Cyprus remains a competitive financial centre, particularly for international companies seeking advantageous tax regimes and regulatory frameworks.

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Only 1% Of Cyprus Farms Use Precision Farming Technologies

Cyprus remains one of the European Union’s least digitised agricultural economies, with just 1% of farms using precision farming technologies in 2023, according to Eurostat.

The findings come as the EU continues to encourage the adoption of digital tools aimed at improving agricultural productivity, efficiency and sustainability.

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Internet Access Expands, But Digital Uptake Lags

Internet access has improved across the bloc, although adoption remains uneven. Eurostat found that 43% of EU farms had internet access in 2023, with northern and central European countries leading the way.

Denmark, Germany, Slovakia, Latvia, the Czech Republic and Austria all reported internet access rates above 90%.

Greater connectivity, however, has not translated into widespread digital adoption. Farm management information systems, which help farmers manage day-to-day operations, were used by only about 11% of EU farms. France was a notable exception, with around 60% of farms using the technology.

Precision Farming Concentrated In Larger Operations

Robotics adoption also remained relatively limited, with only about 7% of EU farms using robotic technologies. Overall, around 18% of farms with utilised agricultural area employed at least one precision farming technology or practice in 2023.

These included robotics for plant protection, band spraying, variable-rate application, precision crop monitoring and soil analysis. Despite representing fewer than one in five farms, these holdings accounted for around 44% of the EU’s utilised agricultural area.

The figures suggest that precision farming remains concentrated among larger agricultural businesses, where investment in digital technologies is typically easier to support.

Cyprus Lags Behind EU Leaders

Luxembourg, Finland and Estonia recorded the highest shares of utilised agricultural area managed by farms using precision farming technologies, each exceeding 75%.

At the other end of the ranking, Cyprus recorded just 1%, while Greece and Romania reported between 10% and 15%. The results indicate that Cyprus remains at an early stage of digital adoption in agriculture, even as precision farming becomes more widespread across parts of the European Union.