Latvian small and medium companies are moderately worried about Brexit and trade wars

Brexit and China-USA trade war has created uncertainty about the future of global economy. However the companies in the Baltic States have rather diverse opinions regarding the impact of these two long-term international sagas on their businesses. In Latvia the entrepreneurs are more worried about Brexit, in Lithuania the biggest concerns are caused by USA-China trade war, while Estonia stands out with its peace and confidence about both ongoing processes, shows the results of Luminor survey.

Luminor asked the small and medium companies to assess the risks, which might be caused by two events - Brexit and China-USA trade war. The survey data show that Latvia is most concerned about Brexit - every fourth or 27% of Latvian small and medium companies believe that Brexit will influence them to a greater or lesser extent. Only 16% of small and medium companies in Lithuania replied that Brexit will have an impact on them, likewise in Estonia - 18%.

In general the entrepreneurs in Latvia expect the coming 2020 rather cautiously, but optimistically - the majority (40%) anticipate stable, permanent sales volumes next year as well. In Latvia the entrepreneurs are more concerned about the expected Brexit than USA-China trade war, however every third (30%) points out that neither of both events would influence them. 59% of Latvian entrepreneurs do not plan expanding their businesses, mainly (15%) due to the fact that they have already expanded their business activity this year. The representatives of Latvian small and medium companies indicate stable external environment and qualified manpower as the main criteria to stimulate their business development.

Analysing data within the Baltics, one fifth of Latvian and Lithuanian respondents, (23%) and (20%) respectively, agree that the global economy will influence their business activities. Estonian entrepreneurs stand out among the Baltic States with their optimistic views. Almost a half or 48% or the respondents in Estonia believe that neither Brexit nor China-USA trade war will have any impact on their business activities. It is interesting that 2% of respondents in each of the countries are convinced that they will benefit from these long political processes.

Among those representatives of the Baltic small and medium companies, who admitted that the United Kingdom leaving the EU would harm their businesses, mentioned uncertainty as one of the most frequent reason as it is unclear what the Brexit consequences on the global economy will be.

In Latvia relatively fewer (36%) companies feel any changes in the behaviour of their partners or customers with regard to the threats to external economy. Almost a half (48%) of the Lithuanian companies who participated in the survey and one third (36%) of Estonian small and medium companies indicated that they feel changes in the behaviour of their partners and customers, as they become more cautious, while reading news about the slowdown in the development of German, the biggest European economy, and the coming Brexit.

“Today businessmen are used to live in uncertainty about the future of the global economy - this atmosphere has become so natural that it does not cause any additional stress even when planning the financial results for the next year, the entrepreneurs take into consideration the slow-down of the economy", points out Kerli Gabrilovica, Head of Luminor Latvia.

The survey reveals that businessmen are optimistic about the nearest future - more than 80% of small and medium companies in the Baltic countries plan to increase or retain their current sales volumes by the year 2020. The biggest percentage of the entrepreneurs who plan to increase their sales volumes are among the Lithuanian businesses (38%), while in Estonia and Latvia this number is smaller (32% and 31% respectively). The biggest number of companies (50%) who plan to retain their turnover at the similar level is found in Estonia, while in Latvia the entrepreneurs are most pessimistic and anticipate decrease in their sales volumes (28%).

An interesting fact: when asked about the reasons why they do not plan expanding their businesses next year, the majority of respondents in the Baltic countries mentioned global insecurity and other reasons, but only 7% specified that their decision is based on limited availability of loans.