Two-thirds of small and medium-sized enterprises in the Baltic States are cautiously optimistic when assessing their companies’ growth prospects for 2026, according to a survey of small and medium-sized enterprises (SMEs) conducted by SEB, which involved more than 1,200 companies across the Baltic States. According to respondents, the main obstacles to business development in all Baltic States are the tax burden and energy prices.
“Macroeconomic forecasts for the Baltic States point to growth as supported by the GDP growth, consumption, employment, and other indicators. In general, these trends are also reflected among small and medium-sized enterprises, where optimistic sentiment remains at the 2025 level. It should be noted that in a survey conducted by SEB banka last autumn among chief financial officers of large companies, the number of optimistic respondents was the highest since 2022. Small and medium-sized enterprises play a significant role in promoting innovation, employment and economic growth in the Baltic region, which is why surveys of entrepreneurs provide valuable insights that help to more accurately anticipate and address challenges, as well as make use of development opportunities,” said Arnis Škapars, Member of the Management Board of SEB, describing the significance of the survey.
In Latvia, the number of optimists amon entrepreneurs remains unchanged, while in Lithuania they are becoming more cautious
Of all entrepreneurs surveyed, 71% in Latvia, 66% in Estonia, and 64% in Lithuania describe themselves as cautiously optimistic. While the share of optimists has remained virtually unchanged over the past year in Latvia and Estonia, in Lithuania it has decreased by seven percentage points compared with the 2025 survey. The number of pessimists has increased in Lithuania (23% of entrepreneurs, compared with 15% last year), whereas in Estonia (25% pessimists) and Latvia (21%) it has not changed significantly.
Survey data show mixed attitudes towards business growth across different sectors in Latvia. Administrative and support services stand out as the most stable sector, with 100% of respondents describing themselves as moderately optimistic. The manufacturing sector is also positively inclined (21% optimists), and sentiment is relatively strong in education and healthcare. The weakest outlook is in the arts, entertainment, and recreation sector (40% pessimists), followed by trade (31%) and agriculture (25%).
Key influencing factors – taxes and energy prices
Comparing the factors that most affect business growth, entrepreneurs in Latvia most frequently cite taxes, high energy prices, and cumbersome bureaucracy. Entrepreneurs in Estonia also highlight the impact of inflation, while in Lithuania, one of the four main influencing factors mentioned is the challenge of finding markets for products and services.
When assessing expected changes in demand for companies’ goods and services, around 61%–66% of small and medium-sized enterprises across the Baltic States anticipate stability. In Lithuania, the share of companies expecting demand to increase is the highest in the Baltics (23%), although 17% of entrepreneurs expect a decline. In Latvia, the situation is the opposite – 20% of entrepreneurs believe demand is likely to decrease, while 14% see the potential for growth. In Estonia, the proportions are balanced: 17% see opportunities for growth, while 18% believe demand will fall this year.
Caution dominates in Latvia and Estonia; a stronger drive to expand in Lithuania
When asked about their priorities for this year, entrepreneurs in the Baltic States emphasise two key priorities: strengthening business stability and optimising costs. More than half of the respondents identified these two as priorities. Opinions are not unanimous regarding the third most important priority. In Latvia and Estonia, it is increasing cash flow (35% of entrepreneurs in Latvia and 43% in Estonia), while in Lithuania, 48% of entrepreneurs aim to launch new products or services this year. The survey shows that Lithuanian entrepreneurs are significantly more active in investing in capacity expansion and in seeking new markets: their share is twice as high as that of Latvian and Estonian companies.A relatively small share of Baltic companies prioritise digitalisation and
innovation. Sustainability remains important only for around one in ten companies in Lithuania and Estonia, and for just 6% of respondents in Latvia.
The number of employees will remain unchanged
Small and medium-sized enterprises have long been cautious about increasing their workforce. The situation has not changed in Latvia, where four out of five companies do not plan to change their number of employees, 6% plan to reduce it, and 15% are considering hiring additional staff. In Lithuania, plans to expand the workforce have become more moderate; however, almost one in five companies still plans to hire new employees. The share of companies not planning any changes has increased to 71%. Meanwhile, Estonia has seen a slight increase in optimism: the share of companies planning to increase their number of employees has doubled to 15% compared with the previous year, while 6% of companies expect to reduce their workforce.
Most comfortable operating in the domestic market, with no investment plans
Small and medium-sized enterprises feel most comfortable operating in their home markets – 75% of entrepreneurs in Estonia, 73% in Latvia, and 63% in Lithuania indicated that they will continue to focus on their domestic markets this year. Ambitions to enter new markets are more cautious in Latvia and Estonia, where only around one in ten companies plans to expand abroad. In Lithuania, however, 23% of entrepreneurs express such intentions. When assessing opportunities to enter foreign markets, entrepreneurs primarily focus on neighbouring Baltic countries, the Nordic countries, the United States, Asian countries, and the United Kingdom.
Regarding investment plans, around one-third of entrepreneurs in the Baltic States said they did not know whether they would make any investments this year. A relatively large share of companies (31% in Latvia and over 20% in Estonia and Lithuania) do not plan any investments. Those who intend to invest mostly plan to do so using their own funds and on a relatively modest scale. This could limit not only the growth potential of individual companies but also the broader prospects for economic development.
Plans to develop products and services
When answering questions about innovation and development plans, entrepreneurs in the Baltic States most frequently identify the development of products and services as a priority. This was mentioned by 28% of entrepreneurs in Estonia, 27% in Lithuania, and 23% in Latvia. This indicates that, despite differing economic conditions, Baltic SMEs view product renewal as a path to competitiveness. The second most notable trend is the importance of automating production and administrative processes, while the third priority is innovation related to employees. Lithuania stands out the most in this area, where 22% of SMEs are focusing on employee development this year, ahead of Latvia (13%) and Estonia (12%).
The Baltic Business Outlook survey has been conducted by SEB banka since 2014. The 2026 report compiles the views of 1,217 SMEs in Estonia, Latvia, and Lithuania.
