The economy is in for a difficult phase

LATVIA – ECONOMICS

In view of the weakening economic outlook, it is not surprising that CFOs of large companies are rather negative about the business circumstances for the coming year. According to SEB – analtics (October 2022),  CFOs have become more cautious and assume that the weakening of the macroeconomic environment will also affect the business of the companies they represent.

The assessment has deteriorated the most in Lithuania, however, the trends are similar in all three countries. The share of optimistic assessments has decreased, but the share of those expecting business to develop moderately or not very favourably has increased.

The economy is in for a difficult phase
Figure 1. Data source: seb.lv

The range of challenges faced by Baltic companies has broadened, and the study shows that problems of the business environment have reached a high level.

Among the most important risks, Baltic CFOs mention geopolitical risks, which rank first in Lithuania and Estonia and second in Latvia. In Latvia, the risk of rising commodity prices is narrowly more important. This risk is cited as the second most important by Lithuanian entrepreneurs and the third most important by Estonian entrepreneurs.

Estonia’s CFO cite the clouding of the economic outlook as the second most important challenge and Lithuania’s as the third most important. Latvia’s CFO cite the rise in personnel costs as the third most important challenge.

The economy is in for a difficult phase
Figure 2. Data source: seb.lv
The economy is in for a difficult phase
Figure 3. Data source: seb.lv

The table shows forecasts of real year-on-year economic growth in per cent, in line with a main scenario – expressed in purchasing power parities (PPP).

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