The latest Citadele Index study shows that entrepreneurs are continuing to become more optimistic concerning the economic development in Latvia. The index has grown by 7.57 points over the last two quarters of the year, and for the first time since the end of 2007, it has climbed above 50 points. That means that for the first time in the last 11 quarters, the mood of businesspeople can be described as optimistic.
Changes in the Citadele Index since Q1 2004
The Study shows that, when asked about the present situation, businesspeople remain pessimistic (48.99 points), but when they are asked about their expectation for the next six months, they are optimistic enough to push the index up to 53.42 points. Moreover, the index related to the present has rapidly increased over the last two quarters, by 14 points. The future index was above 50 points two quarters ago, and it has increased just a bit – by 1.1 points.
Changes in the present index and future index since Q1 2004
The greatest increase in optimism among surveyed businesspeople related to overall economic processes in the country (+15.9 points), economic activity in their own sector (+10.6 points), company revenues (+8.8 points), profitability (+8.4 point) and the company’s overall financial situation (+8.3 points).
Bank Citadele board member Guntis Beļavskis: “The global recession continued for 18 months and was the longest recession since World War II. As the economies of developed countries began to recover some time ago, anyone who is more or less familiar with macroeconomic principles could see that it would be only a matter of time before growth was reinstated in Latvia, as well. I’m an optimist, and I hope that growth will be rapid so that recovery can be speedy, as well. During the first month of Citadele’s operations, I have met with many of our clients – managers of small and medium businesses all over Latvia. After I have heard and seen their mood and their ambitions, I find that the results of the Citadele Index are not surprising to me. We are on the right path.”
Businesspeople in the construction industry are the most optimistic among Latvia’s various economic sectors (+12.6 points), even though ever since mid-2007, people in the building sector have been the most pessimistic. Next on the list after construction firms are manufacturers, service providers and retail companies.
Big companies (more than 250 employees), companies with foreign capital, and companies in Riga tend to have people with more optimistic views than the average.
Arnis Kaktiņš, director of the SKDS public opinion research centre: “The Citadele Index is a forecasting index – it shows how other macroeconomic indicators such as GDP will change in future. If the indicator in the Citadele Index has returned to optimism, then we can say with great certainty that GDP in Latvia will return to growth in the next several quarters, as well. That will only happen, however, if the election and the budget consolidation do not destroy that optimism. We all know that the one thing which businesses need the most is clear rules of the game and an ability to forecast operations. The campaign and the related rhetoric among politicians is instead creating ambiguity and an atmosphere of concern.”
Survey respondents in the Citadele Index were asked whether the approach of the parliamentary election has led the government and Parliament to take decisions which are more favourable for businesses. 59% of respondents said no, while 29% said yes. Moreover, 73% of respondents think that in its next session, Parliament must help to promote entrepreneurship by cutting taxes (73%), making use of European Union funding (45%), promoting exports (43%), helping to promote innovation (31%), and ensuring the implementation of energy-efficient and environmentally friendly technologies (26%).
The Citadele Index (former Parex Index), which is Latvia’s first indicator of business activities in this regard. The Citadele Index helps to forecast the development of macroeconomic indicators in Latvia in future. The study offers a characterisation of the subjective views of Latvian businesspeople as to the economic situation which prevails in the country. The index is based on surveys completed by 750 businesspeople from Latvian companies of various sizes and from various sectors.
Results of the survey of Latvian entrepreneurs
About bank Citadele
Bank Citadele has been established with a view to inspire people and businesses for development and facilitate growth of the region. The Bank provides excellent client service and a variety of services for individuals, businesses and wealth management clients. Bank Citadele is the exclusive partner of American Express® in Latvia and Lithuania entitled to issue American Express credit cards. 75% of the Bank’s shares are held by Privatization Agency, while the European Bank for Reconstruction and Development (EBRD) owns 25% plus one voting share. The total assets of the Bank reach LVL 1.5 billion. Moody’s has assigned the Bank long term rating Ba3.
