SME segment shows increased trust in growing turnovers and readiness to invest in growth

In 2018 Baltic countries were among the fastest growing economies in Europe. Growing wages and internal demand improved the sentiment among small and medium-sized companies as well. SEB bank's Baltic Business Outlook 2019 shows that in all three countries the share of pessimists expecting decline in their turnover has decreased considerably.

In 2018 Baltic countries were among the fastest growing economies in Europe. Growing wages and internal demand improved the sentiment among small and medium-sized companies as well. SEB bank's Baltic Business Outlook 2019 shows that in all three countries the share of pessimists expecting decline in their turnover has decreased, and the share of companies planning to invest in growing their businesses has increased significantly.

Arnis Škapars, Board member of SEB Latvia: "Largest part of SMEs are focused on the local market. The rapid growth of salaries and improved purchasing power have boosted domestic consumption, which, in turn, has contributed to better financial results in both small and large companies. However, the lack of workforce is becoming more pronounced in the SME segment as well, which explains the increased share of companies planning to invest in their businesses. A large share of these investments will be aimed at improving productivity and reaching larger outputs with the same staff."

10% of respondents in Latvia have said that they expect their turnover to increase by more than 15% this year. 76% think that their turnover will either remain at the same level or increase up to 15%. In the previous year only 68% shared this view. However, the share of pessimists expecting a decline in their turnover has dropped from 23% in 2018 to 14% this year.

Similar trends can be seen in neighbouring countries as well. 13% of SMEs Estonia and 11% in Lithuania expect a growth of their turnover by more than 15% this year. Meanwhile only 8% or respondents in Estonia and 12% in Lithuania have said that most likely their turnover will decrease this year. In 2018 this view was shared by 28% of SMEs in Estonia and 20% in Lithuania.

In comparison with the previous year, the share of Latvian companies, which are ready to invest up to 30 thousand euros, has grown from 22% to 36%, and the share of companies planning to invest over 30 thousand euros has increased from 14% to 17%. During previous years Latvian companies were consistently the most passive in terms of investing. However this year more than half (53%) of all respondents in Latvia intend to invest in their company, while only 42% of Lithuanian and 41% of Estonian companies have similar plans.

Baltic Business Outlook is an annual survey by SEB bank, establishing expectations of Baltic small and medium-sized companies in five areas: changes in turnover, number of employees, exports, innovations and investment. Baltic Business Outlook 2019 encompasses answers by 4200 small and medium-sized businesses across Baltic States, including almost 1200 Latvian companies. The survey was done in December of 2018.