OREANDA-NEWS. September 02, 2011. Entrepreneurs’ mood in Latvia continue improving gradually and, similarly to the previous Saeima (Parliament) elections, it is cautiously optimistic, suggests Citadele Index research conducted by Citadele Bank in collaboration with market and public opinion research centre SKDS, reported the press-centre of Citadele Bank.

After a pause that lasted two quarters the general mood index of entrepreneurs exceeds 50 points reaching 50.77 and catching up with the indices of the 3rd quarter of 2010 when the index peaked at 51.21 points.

“Entrepreneurs’ mood recovered last September before the previous Saeima elections, becoming optimistic after a two year long period of express pessimism. After the elections and changes introduced in taxation, the entrepreneurs’ mood again became much more cautious as was rather pessimistic for two quarters. Citadele Index surveys reveal that regardless of these changes in taxation, entrepreneurs have been able to cope and their mood has improved in some indicator groups slowly and steadily since the end of last year. Presently, it is back in the optimistic zone,” says Agnese Paegle, Head of Corporate Banking Sector of Citadele Bank.

“The entrepreneurs’ optimistic mood depends on the State’s economic situation, tax policy and availability of funding. We see in our practice that the companies which have or plan to receive support from the EU funds or State programs are the most active ones in investing. Similarly, a positive fact for entrepreneurs is that banks have re-launched more active lending and it is anticipated that the activity of banks will have a tendency to increase. This, on its part, will facilitate good changes also in the development of entrepreneurship,” says Agnese Paegle.

The results of the survey show that future prognoses of entrepreneurs still tend to be cautiously optimistic. The index that characterises the present has increased significantly, indicating that entrepreneurs are less critical toward the present situation than three months before even though generally the evaluation is still prone to be rather negative.

Similarly to the 1st quarter, the study of the 2nd quarter of this year indicates that cautious optimism is still observed among heads of large, medium and small companies while the mood in the micro enterprise group is still rather pessimistic. However the mood index has increased in this group as well in comparison to the 1st quarter.

As for industries, cautious optimism can be observed in production, trade and services group whereas pessimism still prevails in the construction enterprise group.

Large corporations by turnover (more than 150’000 Lats per year) were rather optimistic in the 1st quarter of this year and now companies with medium turnover (50’000 – 150’000 Lats per year) have joined them. Companies with small turnover (up to 50’000 Lats per year), on their part, are rather pessimistic. Yet a comparison with the previous quarter reveals that the mood index has increased in all turnover groups.

Observing enterprises by the origin of capital, it can be inferred that companies with foreign capital were more optimistic in the 2nd quarter of this year similarly to the end of 2010 and in the 1st quarter of this year. Companies with local capital still are rather pessimistic. However the index value has also increased in this company group.

In terms of regional division, managers of enterprises located in Riga, Vidzeme, Zemgale and Kurzeme were quite optimistic while the mood in Riga's surroundings and Latgale group is rather pessimistic.

Observing index values by the location, companies located in Riga and rural territories were cautiously optimistic in the 2nd quarter whereas enterprises that conduct their activity in other towns are still prone to be pessimistic.

Citadele Index research is conducted on a quarterly basis in order to find out entrepreneurs’ evaluation of the present situation and prognoses for the next 6 months in such fields as general economic activity in the State and corresponding business field. The previous research which was carried out in June 2011 polled 750 heads of companies of various sizes from all regions of Latvia represent various spheres of national economy.