SEB CFO survey: The confidence of Baltic companies is highest in Estonia
A survey conducted by SEB among the financial managers of large Baltic companies in October shows that, compared to previous years, the financial managers' assessment of the business environment has become more positive in all three Baltic countries.
This year's survey revealed that 62 percent of Estonian financial managers who responded think that the business climate will be good or very good for their company in the next 12 months. In Lithuania, financial managers are also optimistic - 55 percent of companies see the business climate as favorable. In Latvia, the corresponding percentage is 51.
"While in the past Estonian entrepreneurs have always been more pessimistic than their southern neighbors, one of the reasons for Estonia's optimism seems to be the relative leniency of COVID restrictions compared to Latvia and Lithuania," commented Artjom Sokolov, head of corporate banking.
Cyber risk is seen as a greater threat than two years ago
Among the biggest challenges in the next 12 months are the shortage of skilled labor in all countries and rising labor costs. The same concerns have been at the forefront in the pre-COVID period. The new COVID restrictions are the most worrying in Latvia and the pressure on prices and profit margins in Estonia.
"However, it is interesting to see that, compared to two years ago, the total concern about cyber risk is diminishing and global economic overheating and potential transatlantic concerns have been relegated to the background, with investment and possible business expansion continuing to focus on domestic investment," mentioned Sokolov.
Sustainability awareness is high
Companies in the three Baltic States think very similarly about sustainability issues. More than half of companies already have a strategy in place to adapt to the challenges posed by climate change, and more than half of companies evaluate the footprint of their products/services. "It´s clear that "the customer is king", because in 74% of cases it is seen that the customer is interested in this topic and companies have to follow the customers needs," Sokolov added.
In all three countries, money is not a problem regarding investments. As regulations are complex, companies are looking for even smarter input to address this issue and a good partner on this path of change.
Skilled labor has become one of the most important concerns for companies in all Baltic countries
The survey shows that the shortage of qualified specialists is the biggest problem in Lithuania, where it was highlighted by 59% of companies. In addition to labor shortages, labor costs are also a concern. In Lithuania (57%), Estonia (56%) and Latvia (41%), the increase in personnel costs is among the biggest challenges in the next 12 months.
"If during the last year main topic for companies became COVID, now the number 1 concern over the years is back - the lack of qualified labor and thus also the general increase in personnel costs," said Artjom Sokolov, SEB's head of corporate banking.
The focus is on automation
One solution to alleviate labor shortages may become automation. 35% of Estonian companies stated as the most priority activity that in the next 12 months they will focus on innovation, process automation and digitalization in their company. Latvian companies think the same, but large Lithuanian companies (25%) prioritize increasing the volume of investments. However, Baltic companies do not plan to expand to new regions in the near future.
“The priority of digitalization among financial managers in Estonia has doubled in a few years. However, only 10% of Estonian companies still see that their further growth could come from expanding abroad. The question is, how long can we, as a small economy, limit our growth to local expansion? ”Sokolov commented.
SEB conducted the Baltic Financial Managers' Survey for the eighth time. The focus of the study is on companies' assessment of the economic situation, the main problems and opportunities in the business environment. This year, 289 companies with an annual turnover of at least 20 million euros participated in the survey.