Analytics, Baltic, Banks, Business

"Baltic SMEs' optimism has declined. The fall was steep in Latvia, Lithuania is more optimistic, and Estonia is more conservative. Up to 15% growth is expected by all the Baltic states. One third [businesses] in Estonia think their turnover will decrease this year," SEB Pank board member Ainar Leppanen said at a press conference Friday.

Of Estonian SME's, 11% expect turnover to grow more than 15%, 58% are moderately optimistic and 31% predict a drop in turnover.

Baltic SMEs are increasingly targeting the domestic market with their products and services. The share of such businesses is 79% in Latvia, 76% in Estonia and 71% in Lithuania. In view of the smaller turnover growth estimates, the enterprises are not in a hurry to hire more staff. In Estonia 80%of businesses are not planning personnel changes. At the same time 27% of Lithuanian SMEs wish to take on more people and 19% of Latvian businesses, on the contrary, plan to reduce staff.

Baltic enterprises are not very interested in hiring foreign labor, with only 6-8% saying they might consider this in the future. While Estonian and Latvian SMEs would import specialists, Lithuanian businesses would rather import executives.

According to Leppanen, enterprises were seen to cling to time-tested and working business models, and interest in innovation had declined in all three countries.

In Estonia, businesses located in Harju County employing more than 10 people with annual turnovers of 65,000-200,000 euros were found to be the most optimistic. Enterprises in East-Viru and Parnu counties were the most pessimistic.

The fifth Baltic business barometer of SEB covered 4,500 Estonian, Latvian and Lithuanian SMEs.