OREANDA-NEWS. December 17, 2013. For next year, Estonian enterprises are forecasting turnover growth and moderate success in export markets – although investment and innovation activity leave something to be desired – as indicated in the survey “Business Barometer 2014” conducted among SEB’s business clients.

“Although enterprises see turnover growth for next year, activities that provide for the future, such as investments and innovation, remain in the background – especially for enterprises focusing on the domestic market. Enterprises oriented to export, who otherwise lag behind foreign competitors, should especially pay attention to investments and innovation,” commented Riho Unt, Chairman of the Management Board of SEB Pank.

According to Unt, the survey results indicate that the industrial sector continues to lead the Estonian economy: the sector is characterised by higher than average turnover growth, mainly supported by exports. In addition, there are great investment and innovation plans for next year, making the industrial sector the most active creator of new jobs next year. The most difficult times seem to be in the construction sector, in which turnover and export growth expectations are rather conservative.

Twenty-five per cent of enterprises forecast turnover growth of more than 15 per cent

As enterprises are forecasting an increase in domestic consumption in 2014, the majority, 92 per cent, see turnover growth next year, indicated by “Business Barometer 2014”. The construction sector, in which every fourth enterprise sees a decline in turnover, is an exception. Enterprises planning to increase turnover by more than 15 per cent in 2014 were considered optimistic – 25 per cent of surveyed enterprises across Estonia, or 7 per cent more than a year ago, fell into this category.

The most optimistic sectors are the industrial and trade sector, in which every third enterprise sees turnover growth of more than 15 per cent. Parnu County is the boldest in terms of turnover next year, with every third enterprise seeing turnover growth of more than 15 per cent.

Thirty-one per cent plan to be more active exporters
In total, 31 per cent of enterprises are planning to enter new markets or expand within already existing export markets. Although this is five per cent less than a year ago, the prospects are good considering the overall economic situation.

The industrial sector is the most active in export, and two thirds of enterprises there are planning to increase their volumes through exports. Ida-Viru is the most optimistic county, standing out with a multitude of industrial enterprises, where every second enterprise is focused on export markets. One of the positive outlooks is that 70 per cent of exporters will be making additional investments next year, which is significantly higher than the average investment indicator for Estonia last year.

Investments in excess of EUR 30,000 are being planned by 41 per cent of the enterprises

Forty-one percent of industrial sector as well as logistics and agricultural sector enterprises are planning investments of over EUR 30,000, which is seven per cent less than a year ago. Sixty-one per cent of enterprises are investing without limiting the amount. More investments will be made in purchasing equipment and renovating production bases. Out of all of the counties, Jarva County, with its large agricultural and industrial sector, is the most active investor, where all 33 surveyed enterprises are planning investments next year.

About 700 jobs added

Enterprises have retained their optimism when creating jobs and 683 new jobs will be added among the surveyed enterprises, almost as much as forecast a year ago. Thirty per cent of created jobs will be in the industrial sector. A decrease is forecast in construction sector jobs, contributing to 40 per cent of the job decline. As expected, most new jobs will be created in Tallinn and Tartu and the most active recruiting enterprises are those with an annual turnover of EUR 200,000–2,000,000 (40 per cent of new jobs) and over EUR 6.5 million (20 per cent). In terms of creating new jobs, Hiiu and Ida-Viru County are the most optimistic.

Fifty-nine per cent are innovative
While 62 per cent of the enterprises planned innovation activities last year, 59 per cent have this plan for 2014. Industry is the most innovative sector, in which half of the enterprises are planning on renewing a product or service. Three quarters of enterprises with a turnover of over EUR 3 million are innovating, and the most innovative regions are Saare and Hiiu County.

This autumn, SEB conducted its second counselling programme across Estonia, in the framework of which representatives from the bank visited 901 Estonian small and medium-sized enterprises in 15 counties to help them prepare a financial analysis for next year.

As part of this counselling project, SEB also compiled a survey, called the Business Barometer, which maps out the entrepreneurs’ expectations for 2014. Entrepreneurs assessed future turnover developments, changes in the number of staff, export and innovation plans, and proposed investments in their companies in 2014.

Thirty-two per cent of the surveyed enterprises had a turnover of up to EUR 200,000, 24 per cent a turnover in the range of EUR 200,000–650,000, 22 per cent EUR 650,000–2,000,000, 12 per cent EUR 2–5 million, and 9 per cent over EUR 5 million.

Agricultural sector enterprises were the most numerous in the survey, with their share reaching 20 per cent. Nineteen per cent of the respondents were from the trade sector and 17 per cent from the industrial sector. The proportion of construction enterprises was 11, and transport and logistics 8 per cent; others already had less weight.