OREANDA-NEWS. February 05, 2014. Baltic small and medium-size enterprises (SME) are cautiously optimistic on prospects for the economy and entrepreneurship, expecting turnover growth and a stable labour market this year, indicates a survey conducted by SEB Pank in Estonia, Latvia and Lithuania.

“Estonian SMEs are taking an optimistic view of 2014, particularly on turnover growth and export markets. In terms of sectors, the flagship of Estonia’s economy is industry, with turnover growth driven by export and also with investments being planned above average and resources being allocated to innovation. Prospects for the construction industry are considered to be the most challenging, whereas it is this sector that is more optimistic than others in Latvia and Lithuania,” said Eerika Vaikmae-Koit, Member of the Management Board and Head of Retail Banking and Technology Area at SEB Pank.

According to the survey, conducted among 3 700 decision makers of SMEs, positive news may be expected about turnovers at enterprises, particularly in Estonia, where a quarter of the surveyed enterprises foresee growth of at least 15 per cent. Increased sales are being forecast also by entrepreneurs in Lithuania and, to a lesser extent, in Latvia. Nonetheless, sources for turnover growth are mainly harboured by internal consumption and not so much by export.

Focusing on the home market was reported by two-thirds of enterprises in Estonia and Lithuania and by three-quarters in Latvia, whereas an ambitious minority are aiming for markets abroad, either by growing their sales there or by entering a market – these enterprises accounted for 31 per cent of the respondents in Estonia and Lithuania and 26 per cent in Latvia.

“What worries one most is that, according to the survey, half the enterprises in Estonia and three-quarters of SMEs in Latvia and Lithuania are not planning to allocate resources to the development of their enterprises, in other words, to innovation. To remain competitive and to revive the economy, resources need to be allocated to innovation consistently in order to give one’s business activity more substance. SEB itself does this, and helps its clients, too, to give thought to innovations. This coming spring, we will conduct dedicated innovation training for a couple of hundred SMEs to help them to find ways to develop their business operations,” Eerika Vaikmae-Koit added.

Baltic enterprises are planning investments at significant levels; however, these are mostly small-scale. Investments over 30 000 euros in 2014 are being planned by 41 per cent of SMEs in Estonia, 27 per cent in Latvia and 22 per cent in Lithuania.

Although a number of enterprises are planning new hires, the majority foresee no change in their staff numbers: 83 per cent of SMEs in Latvia, 75 per cent in Lithuania and 69 per cent in Estonia, a sign of the stability of the labour market. Across sectors, those most optimistic in Estonia are industrial enterprises, whereas in Latvia and Lithuania the best prospects are seen in construction.

In late 2013, SEB ran a counselling project for the second time, which had representatives of the Bank visit approximately 4 400 SMEs in Estonia, Latvia and Lithuania. As part of the project, SEB conducted a Business Barometer survey to map the expectations of Baltic SMEs for the business year that has begun.