The latest Citadele Index study shows that optimism among entrepreneurs has declined a bit for the second quarter in a row, but the mood of entrepreneurs’ remains at the level of optimism – 51.80 points. Citadele conducts the study in partnership with the SKDS market and public opinion research centre. Entrepreneurs in Latgale and representatives from microbusinesses in Latgale, which expressed optimism in the past, have returned to the zone of pessimism, while among all sectors, the greatest optimism has been expressed by retailers.
When the index is above 50 points, that means that businesspeople are optimistic. When it is below 50 points, that indicates pessimism.
“The 49.8 points among entrepreneurs in Latgale show cautious pessimism, and for companies with annual revenues below LVL 20,000 the index slid to 48.77 points during the third quarter of this year,” says SKDS director Arnis Kaktiņš. “There is also a key difference in the mood of exporting and non-exporting companies. Non-exporting companies have dropped by 0.9 points to 50.48 points in the Citadele Index study, while exporting entrepreneurs still feel quite comfortable, and the level of the index is at 55.41 points – 0.6% more than during the second quarter of this year.”
In terms of economic sectors, a slight increase in optimism has been seen in the retail sector – up by one points to 52.67 points. Entrepreneurs in the service, manufacturing and construction sectors are less optimistic, the level dropping by 0.4 points to 51.60 points in the service sector, by one point to 52.02 points in the manufacturing sector, and by as much as 4.5 points to 50.04 points in the construction sector.
It may be that entrepreneurs in the retail sector expect increased consumption in advance of the holidays and the implementation of the euro in Latvia.
“Five new countries have joined the euro zone since 2007,” says the Citadele Bank’s chief economist, Zigurds Vaikulis. “That has occurred during different phases in the economic cycle, but there are a few things that they all have had in common. During the last few months before the implementation of the euro, the amount of cash in circulation rapidly declines, but there is no shopping boom. Immediately after the implementation of the euro, people become very cautious, apparently because they are getting accustomed to new prices at shops. Once people become accustomed to the new currency, activity is restored rapidly, and in February and future months, people are in a hurry to catch up and thus spend lots of money.”
In terms of the size of companies, microenterprises, as always, have been most pessimistic, though the index all year long has shifted between 50 and 51 points. Representatives of large companies have been far more optimistic, with the Citadele Index ranging between 55 and 57 points.
Elīna Egle, board chairwoman of the Latvian Forum of Small and Medium Businesses, says that next year micro and small companies will face a few bits of bad news that might influence their mood. One is the law on social security, which speaks to the collection of taxes for each board member who works without compensation. The microbusiness tax is to increase, there will be an excise tax on auto gas, and energy resources will become more expensive, as well.
The research shows that among various economic parameters, microbusinesses are experiencing a serious increase in competition. Asked about competition in their sector, representatives of these companies reached a level of 58.08 points on the index during the third quarter of this year.
“Competition during the crisis was far lesser, and in 2010 it was easier for us to launch operations,” explains Gatis Gasons, board chairman of the baking company SIA Ciemakukulis. “That was a period of opportunity, and we made successful use of it. Right now we are feeling far more competition.”
The Forum of Small and Medium Businesses organised a Small Business Day in support of small enterprises on November 16 of this year. The aim was to allow micro and small companies to open their doors to new clients, inviting consumers to learn about those companies which are close to their place of residence, to support them with praise or advice, or to make purchases or submit orders.
Citadele Bank, too, is particularly concerned about small enterprises, and as part of its “Support Small Businesses” initiative, it offers a Microenterprise Set of Services. All of the basic banking services which small enterprises need are available in a single set and for a particularly advantageous starting and monthly price. This means that the company can easily plan its monthly expenditures and deal comfortably with its finances.
The study was conducted by SKDS and Citadele in September 2013, correlating answers given by 750 directors of companies in Latvia from various sectors and of various sizes.
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 September 2013.
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 8 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).
Recent press releases
Citadele Bank (Latvia)
Citadele Bank (Latvia)
Citadele Bank (Estonia)