Less than half a year now remains until the transfer from the lats to the euro in Latvia, and increasing numbers of entrepreneurs are signalling their support for the process. 48.8% of entrepreneurs support the transfer at this time, which is 14.2% more than in September last year - this according to the Citadele Index survey that was conducted in June by the Citadele Bank and the SKDS public opinion research centre.
Where 48.8% of respondents supported the transfer to the euro in this survey, 44.9% did so in March of this year, and only 34.6% did do a bit less than a year ago - in September of 2012. The highest level of support comes from large companies with annual revenues of more than LVL 1 million (74%), companies with between 50 and 249 employees (75%), and enterprises with 250 or more employees (71%).
There has been a significant increase in support for the euro among those companies which engage in exports. 48% of such entrepreneurs supported the euro in a study conducted during the first quarter of this year, but now the level is 63%.
"For several quarters now we have seen increased support for the euro among entrepreneurs," says the Citadele Bank's senior economist, Zigurds Vaikulis. "It is clear that as the likelihood of implementing the euro has increased, entrepreneurs have increasingly been focusing on the process as such, also learning to appreciate the positive benefits which the transfer will ensure for the country's economy. One of the key factors is a potential increase in investments from countries in which the euro is already the national currency, and this has to do with more than just the complete disappearance of currency exchange risks. This will also help Latvia's government to improve its credit ratings and reduce lending costs. That will mean less of a need for budget revenues, thus creating fertile soil for tax reductions. To be sure, the desire to preserve the lats has an historical and emotional background, but this study shows that businesspeople are prepared to accept the euro so as to create a foundation for greater competitiveness in the unified European market."
It must also be noted, however, that nearly one-fifth of entrepreneurs (19.5%) have a neutral approach toward the euro, and that is 5% less than in Q1. 1.2% of entrepreneurs have no opinion about the matter, and that percentage has not changed since the last study. The proportion of respondents who oppose the introduction of the euro, by contrast, has increased a bit - from 16.5% in March to 20% in June.
The survey was conducted in June 2013 by the SKDS public opinion research centre in partnership with the Citadele Bank. 750 respondents from companies of various sizes and from various sectors in Latvia were surveyed.
The Citadele Index
The Citadele Index describes the subjective views of Latvian entrepreneurs about the economic situation in the country, also asking them to make forecasts for the next six months in area such as overall economic activity in the country and in the relevant business sector. The Citadele Index is based on a survey of 750 companies’ directors in Latvia who represent firms of different sizes and in various sectors. SKDS conducts the survey once every quarter. The last one was conducted in June 2013.
About Citadele Bank
Citadele is a local Latvian bank, which offers banking, financial and asset management services. Citadele group is represented in the Latvian market as well as in 9 other countries. Citadele Bank is the only collaboration partner of American Express® in Latvia and Lithuania who is entitled to issue American Express credit cards. In 2012 the bank was recognized as the best governed state-owned enterprise in the Baltic States according to a study conducted by the Baltic Institute of Corporate Governance. Citadele’s vision is to become the most valuable local financial group in the Baltic States. 75% minus one Citadele Bank’s shares are possessed by the State Joint Stock Company Privatization agency on behalf of the Latvian State and the owner of 25% plus one share is the European Bank for Reconstruction and Development (EBRD).