OREANDA-NEWS. January 09, 2009. A significant weakening of optimism in the attitude of Latvian entrepreneurs towards the economic situation of the country is revealed by the results of the business activity research Parex Index, conducted in December 2008, reported the press-centre of Parex banka.

Furthermore, entrepreneurs expect to receive the State support during the time of economic constraints. In December, the index decreased by 6,15 points hitting a new record-low – 35,26 points. This has been the most drastic change in the mood of entrepreneurs since the establishment of Parex Index in 2004.

“Developing our banking services we will definitely use the results of this research as the priorities of both private individuals and businesses have changed. These data will also be useful to the Latvian Government in planning the allocation of the European Union and IMF funds to stimulate the development of national economy,” Nils Melngailis, Chairman of Parex banka, says.

In December 2008, the index dropped by almost fifteen points below the 50-point neutral rating threshold. Over the course of last eight quarters the evaluation in general has decreased by almost 25 points but since the end of 2006 the overall rating has been moving down steadily.

In December, both the present (34,06 pts) and the future (36,46 pts) indexes were negative reflecting a pessimistic view on the development of economy not only currently but also for the next half-year. Compared to the previously seen – a more optimistic – future vision of the entrepreneurs, in the latest research it is exactly the future index that shows the most dramatic decrease (by 7,46 pts), an indicative of a negative evaluation of the harsh end of the year in the banking sector as well as in the economy in general.

Assigning only 14,59 points, the Latvian entrepreneurs have been the most critical about the overall economic activity in the country. They believe that the economic activity in the respective sector (26,01 pts), turnover (33,31 pts), financial position (34,04 pts) and cost-efficiency (34,05 pts) of the enterprise have also declined sharply. Somewhat better indexes have been assigned to the investment volume (43,62 pts) and the number of employees (42,25 pts) in the enterprise. Competition in the respective sector is still seen as relatively high – 52,09 points.

Equally, majority or 59,3% of the Latvian entrepreneurs believe that the Government must support the ailing enterprises, according to the additional question – Do you believe the Latvian Government should follow the lead of other European Union countries and USA and support local enterprises that have landed in difficulties due to the global economic crisis? – included in the poll. Additionally, 28,8% of the respondents think that the Government should rather support enterprises in difficulties; thus, the total of 88,1% of the Latvian entrepreneurs consider that the State should support the ailing businesses.

3,6% of the respondents, providing their answers to the above-mentioned additional question, believe that the Government should rather not support the struggling enterprises, but 2,4% of the entrepreneurs are even more categoric and consider that the State should not support such businesses. 5,9% of the Latvian busines people did not have an opinion on this question.

Answers provided to the second additional question – How has the acquisition of the controlling stake in Parex banka by the Latvian State changed your attitude to Parex banka and the use of its services? – show that following the December events, 50,7% of the entrepreneurs have not changed their attitude to Parex banka, but the attitude of 4,7% has even somewhat improved, while 0,5% report a significant improvement of attitude.

At the same time, 18,8% of the respondents feel that their attitude to Parex banka has somewhat worsened, but 9,6% admit a significant worsening of attitude. 15,7% found it difficult to specify the answer to the given question.