German companies remain positive about their growth prospects in Estonia, Latvia and Lithuania, an annual survey by the German-Baltic Chamber of Commerce (AHK) shows. According to the survey, which is based on answers from 119 companies operating in the region, investors remain particularly optimistic about their turnover growth, the situation within their respective sectors and their propensity to invest.
Confidence in investing in the region grew across the board, but executives were particularly bullish about Lithuania, thanks to the pro-business approach of the government formed by Algirdas Butkevicius in December 2012, and the country's decision to adopt the euro in 2015. While in 2012, only 11% of German investors assessed their economic situation as good, this year that proportion rose to 58%. Their likeliness to hire new employees rose from 26% in 2012 to 47% in the latest survey.
“The very positive 'psychological' aspects of the euro adoptions by all the Baltic states for partners and potential investors should not be underestimated, as the region is [becoming] stronger into the [eyes] of foreign investors,” said AHK experts.
German executives surveyed by AHK also pointed to areas that still hinder the region's FDI potential, with the shortage of skilled labour and, in case of Lithuania, an insufficiently flexible labour law, being the main points of concern. “Introducing a more practical and future-orientated dual vocational training system is still the most common suggestion made by the German companies operating in the Baltic states to the respective governments,” AHK experts said.
According to greenfield investment monitor fDi Markets, between 2008 and 2013, German companies launched 40 new projects worth more than $442.7m in Estonia, Latvia and Lithuania. Lithuania is the largest recipient of German investment, and has recorded received 22 such ventures since 2008. Estonia and Latvia received nine investments each in the same period. The most popular sector for German companies targeting Baltic states is consumer products and transportation. Hellman Worldwide Logistics, an Osnabruck-based logistics services firm, and Lidl, a Neckarsulm-headquartered discount supermarket chain, were the most prolific investors between 2008 and 2013, launching four and three new projects in the region, respectively.