OREANDA-NEWS. November 12, 2014. A survey conducted among the CFOs of SEB Pank showed that in September of this year, 41% of the major corporations in the Baltics rated the business conditions of their company over the coming six months as either favourable or highly favourable.

When the same survey was performed in March, 51% of the respondents expressed a similar opinion. Now, 15% of the Baltic CFOs feel that business conditions over the coming six months will be either unfavourable or very unfavourable, while 44% hold a neutral position on the issue.

The change in their positions can be explained by the worsening geopolitical situation and the situation with Ukraine taking an unexpected turn. The conflict in Ukraine has escalated and shaken the whole region of Eastern Europe. CFOs in Estonia are the most sceptical – only 23% are expecting the business environment to be favourable, while 18% feel that the environment is going to be either unfavourable or highly unfavourable.

In Latvia, the share of optimists has dropped by 14%, from 59% in March to 45% in September. Entrepreneurs in Lithuania display the most optimism, with 53% believing that business conditions are favourable. Their opinion could be related to positive trends in domestic demand. At the same time, the share of entrepreneurs in Lithuania who are concerned about the future has risen from 3% to 14%.

More than half (56%) of the CFOs of Baltic companies have cited the decrease in demand as their main cause for concern. Anxiety regarding this issue has risen in all three of the Baltic States. The availability of skilled workers – which is a hallmark of long-term problems and the negative consequences of immigration – has become an issue mostly in Lithuania and Estonia. In Latvia, the issue has lost a certain amount of relevance. In all three of the Baltic States, concern over labour costs has decreased. This shows that entrepreneurs have gained more trust in the loyalty of their employees.

In comparison with the previous survey, concern over the availability of financing and interest rates has also decreased. In September, only 12% percent (18% in March) of the Baltic CFOs stated the availability of financing is a problem to them and only 5% (14% in March) were worried about interest rates.

Disruptions in cooperation between Russia and western countries, along with the loss of trust, have also been at the centre of attention. Out of the CFOs of the Baltic States, 44% are convinced that these processes will have a negative impact on their business, and 12% stated that the escalating conflicts has had a particularly negative impact.

In this sense, the opinions of the CFOs of Latvia, Lithuania and Estonia are similar. At the same time, 55% of CFOs in Lithuania, 50% in Latvia and 60% in Estonia believe that the conflict between Russia and the western countries has had a negative impact on their company.

The first survey of Baltic CFOs was conducted in March of this year. Another survey was conducted in September, to find out if there had been any change in opinion. The results show whether the CFOs are expecting the next six months to bring either good or bad news to their companies; determine the main issues and challenges; indicate whether companies are planning to expand or decrease their number of employees; and provide a glimpse of other topics. Around 150 of the largest companies, with a turnover of more than EUR 20 million, from Latvia, Lithuania and Estonia, participated in the survey.