Press Release
Baltic companies are more optimistic about economic development again
The German-Baltic Chamber of Commerce (AHK) conducted the annual business survey of its members from 13 February to 17 March. The survey was conducted simultaneously in 16 countries in Central and Eastern Europe, in which more than 1620 companies took part, including 139 from the Baltic States. After the last survey in April 2022 was characterised by the effects of the outbreak of war in Ukraine, this shock appears to have been overcome for the time being in 2023. Overall, the assessment of the economic outlook in the current year is more optimistic than in the previous year. In Estonia, the outlook is rated as significantly ‘better’, in Lithuania at least as no worse than the previous year. Latvian entrepreneurs, on the other hand, were more cautious, with the majority again expecting the economic outlook to be worse than in 2022.
Nevertheless, the majority of respondents rate the current economic situation in the Baltic states as ‘satisfactory’, although this is not the same as in 2021. Even though the trend is more positive in all three countries, the previous level, in which a good assessment was even more widespread, has not been reached. Overall, the majority of the companies surveyed expect turnover to increase in the current financial year, particularly in Lithuania, where three out of four companies anticipate a positive development. One of the reasons for this is the expectation of increasing export activities.
In Estonia, Latvia and Lithuania, around two in five companies are inclined to increase investment, which is why employment is not expected to fall. On the contrary, companies are finding it increasingly difficult to find skilled workers for their vacancies, which is also reflected in the expectation of rising labour costs. Companies are currently still able to absorb this, but would like to invest more in the expansion of in-house training, recruit skilled workers abroad and advance their automation and digitalisation.
The war in Ukraine is still expected to be a potential disruptor of the company's own business activities, in particular higher energy costs, raw material prices and costs for upfront expenditure. In addition, disruptions to supply chains and a reduction in incoming orders are expected in the current financial year.
The Baltic states remain one of the most attractive investment locations in the Central and Eastern Europe region, even when analysed individually. All, or almost all, of the companies surveyed would choose Estonia and Lithuania as an investment location again, while Latvia falls slightly behind in the survey, as one in four companies would not repeat their investment here. In order to make the Baltic region even more attractive as a business location, companies across all countries would like to see an improved availability of skilled labour and better qualifications and training for their employees.
Overall, Baltic entrepreneurs are again cautiously optimistic about economic development in 2023. The effects of the war in Ukraine have not led them into a sustained recession and the initial shock has been overcome. In terms of behaviour, they expect business activity to increase, as disruptors to their own economic activity are still conceivable. Rising energy prices, the functioning of supply chains and the availability of skilled labour are among the biggest challenges facing the Baltic region. Nevertheless, the majority expect a positive financial year in 2023.