SEB Business Barometer: This year, the companies of Valga County take more careful, but still a forward-looking position

The survey “Business Barometer 2015” conducted by SEB in October and November 2014 revealed that one fifth of the companies of Valga County are planning to expand on export markets in 2015. Optimism of the companies of Valga County concerning turnover increase has decreased in a year, as well as readiness to make major investments.

The companies planning to increase their turnover by at least 15% in 2015 were classified as optimistic in the survey. The research covering 3,000 small and medium-sized enterprises (SMEs) in Estonia revealed that average business optimism in Estonia has decreased from 25% to 20%.
In Valga County, the number of companies with optimistic attitude towards turnover increase has decreased from 28% to 19%. 

In sectors, trade and industry are continuously on an optimistic position, now also taken by the construction sector. Last year, it belonged into the most pessimistic sectors.

“Expectations of the companies in Valga County for the new business year are characterised by unchanged plans to expand on export markets (unlike other regions of Estonia) and investment volume, which has decreased by more than 7 times. When looking these figures separately, the economic life of the region could be seen in a too positive (or negative) light. However, in real life, the situation is actually somewhere in between, the companies are planning to realise their new business possibilities also during changes, but will not risk their resources or take new obligations and rather wait until the situation stabilises,” said Indrek Lass, the Manager of SEB’s Southern region.

Domestic market is more important than export markets; investment plans of companies have remarkably decreased
The number of companies in Valga County planning to enter new or expand on the existing export markets has not changed: last year, it was 22%, now 21%. The average figure of Estonia is 28 per cent, 3 percentage points less than in the previous year. 

The survey conducted by SEB revealed that the plans of small and medium-sized enterprises in Valga County related to investments of over 30,000 euros have dropped from 67% to 9% compared to the year before. Average figure of investment plans of Estonian companies has decreased from 41% to 16%. However, in Estonia, there are still examples of business regions with active investment plans, such as the Ida-Viru and Järva counties, where every fifth company is planning investments.

Fewer new jobs, innovation of products and services continues
The surveyed companies plan to create almost 1,500 new jobs in total in the coming year in Estonia. This is an unexpectedly high figure, taking account of the current economic situation. Only 4% of Estonian companies expect a decrease in the number of employees. Last year, 22% of the companies in Valga County planned to employ new employees; now, the relevant figure is 19%. The average figure of Estonia is 23%, 4 percentage points less than in the previous year.

The number of Estonian companies planning innovation has increased from 59% to 73%. For the companies of Valga County, innovation has become more important: while in the previous year, 56% of companies planned innovation of products and services, this year, the relevant figure was 79%.

According to the survey, 36% of Estonian companies are planning innovation of a product or a service, 24% development of employees, and 11% change of business model. In a year, interest in innovation has essentially increased in Estonian construction sector, which is planning to intensify training and development of employees. The most innovative field is still industry, where competition is tight and companies are operating extensively on export markets.

“Innovation plans, as well as plans to create new jobs in this region indicate that active business has been ‘put on hold’ in the companies and development processes are rather directed inwards, compared to the recent years. We welcome such attitude and we are happy to see that even in the periods of economic fluctuation, our companies are not just sitting around doing nothing,” said Lass.

ABOUT THE SURVEY:
In October and November 2014, SEB conducted their third counselling project. Within the framework of the project, the survey “Business Barometer 2015” of Estonian SMEs was conducted, in order to map expectations of the companies for the coming business year. The research covered 2,837 small and medium-sized enterprises. 75 companies of Valga County also participated in the research. Most respondents in Valga County were companies of service and administration, agriculture and forestry, and education and culture sectors.

Further information:

Julia Piilmann
Head of Communications
Marketing and Communications Division
SEB Pank

Phone +372 665 5340
Mobile +372 512 4808
Address Tornimäe 2, 15010 Tallinn Estonia
E-mail julia.piilmann@seb.ee 
www.seb.ee