SEB survey: The optimism of Estonian SMEs is the highest in five years
The economic growth of the Baltic countries was among the fastest in Europe in 2018, and the growth in wages and domestic demand has significantly increased the confidence of small and medium-sized enterprises (SMEs) in Estonia, Latvia and Lithuania for the current financial year, according to the SEB survey Baltic Business Outlook.
Optimism is highest in Estonian SMEs, of whom 92% expect their revenue to grow this year, the highest figure in the last five years. The respective percentage is 89% in Latvia and 87% in Lithuania, meaning that, depending on the country, the share of SMEs that predict revenue decline has fallen to 10%.
Although the proportion of Baltic SMEs expecting rapid growth of revenue by more than 15% has not changed notably in a year, the number of moderately optimistic SMEs that expect their revenue to grow up to 15% growth has increased significantly.
“The vast majority of SMEs operate in the local market. Growth in wages and purchasing power has boosted domestic demand, which in turn has improved business performance. This is also confirmed by the data of Statistics Estonia which show that, according to preliminary data, the total profit of the Estonian business sector grew by 4 percent last year. Although economic growth is expected to be moderate in the coming few years, focusing on the domestic market alone may no longer be sufficient,” said Ainar Leppänen, Head of Retail Banking at SEB Pank.
Approximately three-quarters of Baltic SMEs sell their products and services to the local market, whereas 13% of SMEs in Lithuania, 11% in Estonia and 7% in Latvia are planning to expand to new markets this year.
According to Mr Leppänen, SMEs should think about increasing investments to maintain competitiveness. Compared to the previous year, the interest to invest has increased most in Latvia, where 36% of SMEs plan to invest up to EUR 30,000 (up from 22%); in Estonia, the share was 22% and 25%, respectively, and the share of companies planning larger capital investments has also slightly increased in Latvia.
It is the seventh consecutive year that SEB Group has organised the Baltic Business Outlook Survey, mapping the expectations of Baltic SMEs for the current financial year. Nearly 4,500 SMEs responded to the Baltic survey that was conducted last December.
For more information:
Evelin Allas
Communications Manager
SEB
Phone: +372 665 5649
Mobile: +372 511 1718
Address Tornimäe 2, 15010 Tallinn
E-mail mailto:evelin.allas@seb.ee
