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Vast majority of Latvian SMEs expect turnover growth in 2015: survey

Xinhua, February 5, 2015 Adjust font size:

The vast majority of small and medium-sized enterprises (SME) in Latvia expect their turnover to edge up this year, shows the latest Baltic Business Outlook released on Wednesday by Latvia's SEB Banka.

The survey reveals that 73 percent of SMEs in Latvia project their turnover to rise by up to 15 percent in 2015, and 10 percent of the polled SMEs expect their turnover to grow by more than 15 percent. Meanwhile, 17 percent of those surveyed anticipate a drop in turnover this year.

"Latvian entrepreneurs feel stable, but at the same time there is no big optimism among the SMEs. As far as turnover is concerned, the share of moderate optimists expecting a small increase in turnover has remained unchanged from last year, at 73 percent," SEB Banka representative Ieva Tetere told journalists at the presentation of the survey.

Tetere said business confidence in Latvia had been affected by the situation in Latvia's eastern neighbor countries, legislative amendments and a debate on micro-enterprise tax.

SMEs representing the manufacturing and construction sectors showed the strongest confidence, with 18 percent and 17 percent of SMEs in the respective sectors expressing optimism about this year's prospects.

SMEs operating in the agricultural and fisheries sector, as well as the transport and logistics sector emerged as the biggest pessimists, with 23 percent and 22 percent of companies in the respective sectors having a bleak outlook on the year ahead.

The survey also reveals that this year 82 percent of Latvian SMEs are going to focus on business in the domestic market, 8 percent are planning expansion to new export markets and 10 percent intend to strengthen operations in their existing export markets.

Most entrepreneurs, or 84 percent, are not planning to hire new employees in 2015, 3 percent are planning layoffs, and 13 percent are planning to recruit more workers this year.

"In some sectors unemployment is going to increase, and policy makers should draw their conclusions from this," said SEB Banka's macroeconomics expert Dainis Gaspuitis.

The survey's data suggests that layoffs are likely in the Latvian transport and logistics sector, but new employees might be hired in the hotel, restaurant and catering sector, as well as in the manufacturing and construction sector.

"The tourism sector feels quite comfortable, even though some entrepreneurs have been concentrating on tourists from Russia, which is experiencing a steep slowdown, and this means that they must regroup quickly and make changes in their service plans, prices and offers," said Gaspuitis.

Entrepreneurs in Latvia have also grown more cautious about spending money on innovation, with 18 percent planning to spend more than 30,000 euros (34,260 U.S. dollars) and 10 percent up to 30,000 euros on innovation this year. Meanwhile, 39 percent of the surveyed SMEs do not intend to invest in innovation this year, according to the SEB survey.

SEB Banka is the third biggest bank in Latvia by assets. Endit