21 Sep 2021
Swedish investors find that the business climate in the Baltic States is good, even though the situation has slightly worsened in all three countries compared to 2018.
The embassies of Sweden in Estonia, Latvia and Lithuania and Team Sweden in close collaboration with Swedbank, Telia and law firm Glimstedt have recently conducted a Business Climate Survey of non-local representatives of companies with Swedish capital, local companies with Swedish management and other companies associated with Sweden, to track trends and issues affecting businesses in Estonia, Latvia and Lithuania from a Swedish perspective.
In general, Swedish investors find that the business climate in the Baltic States is good, but that the situation has slightly worsened in all three countries compared to the results from 2018. The decline in positive opinion is most pronounced in Latvia, with the share of respondents finding the local business climate good or very good declining from 74% in 2018 to 39% in 2021.
Swedish entrepreneurs in the Baltic States have strong market confidence. They are optimistic about the future, especially in Latvia, where most respondents foresee a turnover growth (74%), but also more than every second company is expected to grow in Estonia and Lithuania in the coming year. In contrast, every 5th respondent in Estonia foresee a decline.
In terms of sustainability practices, there is some room for improvements in all three Baltic States. Although major CSR-related developments have taken place during the past 10 years, the survey respondents claimed that it is still not that important for Baltic customers that their suppliers are actively engaged in Agenda 2030 and CSR. According to the Swedish companies, neither environmental nor social aspects have a major effect on purchasing decisions today in their respective industries. When purchasing products or services, environmental and social issues do not yet play a big role in the purchasing decision-making process. In Latvia and Lithuania every 4th respondent regards environmental issues as being important, while in Estonia less than every 5th prioritizes environmental issues when making purchasing decisions.
Market conditions, apart from sustainability aspects, meet the expectations of the Swedish companies in all three Baltic States. Estonia scores highest when it comes to digitalization and corporate taxation. The Lithuanian work culture and business mindset, on the other hand, corresponds to Swedish expectations slightly better than Estonian and Latvian. Swedish companies in Latvia are slightly more optimistic than their Baltic neighbours.