OREANDA-NEWS. December 30, 2014. The survey „Business Barometer 2015“ conducted by SEB in October and November has revealed that the companies in Viljandi County have less optimistic expectations for turnover increase than in the previous year.

However, the companies in Viljandi County have retained interest in innovation of products and services, and more attention is paid to domestic market instead of export markets.

The companies planning to increase their turnover by at least 15% next year were classified as optimistic in the research. While the research conducted a year ago showed that 20% of the companies in Viljandi County were optimistic, this year the respective rate was 10%.

The survey covering 3,000 small and medium-sized enterprises (SMEs) in Estonia revealed that average business optimism in Estonia has decreased from 25% to 20%. By counties, the companies of Harju County are still the most optimistic. In sectors, trade and industry are continuously on an optimistic position, and the construction sector was added as well. Last year, it belonged among the most pessimistic sectors.

“The decrease in business optimism in Viljandi County is significant, but this does not inevitably mean economic stagnation of the region. Despite the fact that companies are not expecting an increase in turnover, they again concentrate on innovation and strengthening their positions on the domestic market, and in the coming year, these spheres may also play a positive role in increasing the domestic consumption,“ said Tiina Ormisson, the Head of West Division of SEB.

Focus is on the domestic market instead of export; fewer major investments are made
Compared to the previous year, the percentage of companies in Viljandi County planning to enter new or expand on the existing export markets has decreased (from 38% to 22%). Investment plans of the companies in Viljandi County have decreased significantly compared to the previous year: while 53% of the companies were planning to make investments exceeding 30,000 euros in 2014, only 20% of the companies in Viljandi County are planning similar investments in 2015. However, the figure of Viljandi County is still 4 percentage points higher than Estonian average figure, and together with Ida-Viru and Jarva counties, they are three Estonian business regions with the most active investment plans. Investment readiness is the lowest in Valga County, where only every tenth company is planning investments.

“The current economic situation creating both challenges and possibilities for companies. For example, low cost of money can and must support investments, and the companies who now dare to make them, will be ahead of their competitors in the future. Recovery of economic development will increase proportionally also the cost of money, which can cause major additional costs in case of major investments compared to today,” Ormisson noted.

Fewer new jobs; focus on innovation

The surveyed companies plan to create almost 1,500 new jobs in total in the coming year in Estonia. This is an unexpectedly high figure, taking account of the current economic situation. Only 4% of Estonian companies expect a decrease in the number of employees. Last year, 28% of the companies in Viljandi County planned to employ new employees; now the respective rate is 13%. The average figure of Estonia is 23% (27% last year).

The number of Estonian companies planning innovation has increased from 59% to 73%. Also the companies of Viljandi County consider innovation of products and services essential, and 69% of the companies of Viljandi County are planning innovation for the coming year. This is two percentage points more than in the previous year.

35% of Estonian companies are planning innovation of a product or a service, 24% development of employees and 11% change of business model. In a year, the interest in innovation has significantly increased in Estonian construction sector, which is planning to intensify training and development of employees. The most innovative field is still industry, where competition is tight and companies are operating extensively on export markets. Innovation plans are lowest in agriculture.