SEB survey: Remaining cautious, Baltic SMEs see potential in domestic markets

Baltic small and medium-size enterprises (SMEs) remain cautious about the business sentiment in 2016 when they are facing a number of challenges in export markets, indicates SEB survey Baltic Business Outlook 2016.

According to the poll that covered over 5,000 SMEs in Estonia, Latvia and Lithuania, the share of ‘optimists’ - the companies expecting a turnover growth of at least 15% or more - is the highest in Lithuania at 20% and the other countries follow close behind. However, in Estonia and Latvia the number of pessimists has gone up to 28%.

“Volatility of the global stock markets and falling commodity prices are another signs of unease in the global economy, which affects the outlook in the Baltics. Of three countries, Lithuanian SMEs look most confident about 2016, but there is room for improvement for achieving sustainable growth in the future”, said Head of Retail Banking and Technology Area Eerika Vaikmäe-Koit. 

In 2016, approximately three quarters of the Baltic respondents will focus on domestic markets – supported by recent growth in retail sales in all three countries. Of Latvian SMEs, 16% will be exploring new foreign markets, which means an 8 percentage point (pp) growth compared to the previous survey. In total, the share of companies targeting either new or existing export markets is quite equal across the region: in Lithuania 30%, Latvia 29% and Estonia 27%.

Fewer companies are planning to hire staff in Estonia, down by 5pp to 18%, compared to the year 2015, while Latvian companies (up by 7 pp to 20%) feel more optimistic about increasing staff in 2016. Most companies in all markets expect to have staff numbers unchanged.

Products and services are the preferred field of innovation, as 39% of Estonian and Lithuanian and 36% of Latvian SMEs expect to focus on that in 2016, followed by employee training. Business model innovation is not deemed as important and here the share of innovating companies remains under 10% in each country.

The number of companies planning to invest more than EUR 30,000 is decreasing, although not significantly. Of Lithuanian SMEs, 25% expect to invest up to EUR 30,000, while in the previous survey only 12% expressed that intention. Latvian companies are most reserved, with 40% saying they do not plan any investments in 2016.

In the autumn of 2015, the SEB Group in the Baltics carried out a survey to map the sentiment of the small and medium-sized enterprises (SMEs) for the business year 2016. The new edition of the Baltic Business Outlook sums up the project and provides insights from 5,119 Baltic SMEs participating in the survey.

Contacts:

Evelin Allas
Communications Manager
Marketing and Communications Division
SEB
Phone +372 665 5649
Mobile +372 511 1718
Address Tornimäe 2, 15010 Tallinn
E-mail evelin.allas@seb.ee
www.seb.ee