PricewaterhouseCoopers: Baltic CEO Survey

PricewaterhouseCoopers (PwC) conducts a global CEO survey each year. The most recent survey was conducted online over the period from 28 November 2022 to 9 January 2023. PwC interviewed 323 Latvian, Estonian and Lithuanian CEOs: 47% were women and 49% were men, but 5% did not wish to state their gender/sex. Respondents come from sectors such as trade, finance, construction, manufacturing, IT and telecommunications, health care, and transport. The findings of the survey are the following…

2022 brought more turmoil to the Latvian economy, businesses and people. When it seemed that we had overcome one crisis and learned to live in the post-pandemic world, another crisis arrived, one that is still difficult to grasp. The Russian war in Ukraine, the energy crisis and the fast-growing rate of inflation make Baltic CEOs more pessimistic than they were a year ago about global and Baltic economic prospects, but they are more optimistic about their companies’ own prospects. They see the need for change and they are also thinking about the steps they need to get there, according to PwC’s Baltic CEO Survey 2023, which interviewed 323 CEOs in Latvia, Lithuania and Estonia.

According to a “quick” assessment published by the Central Statistical Office in January, Latvia’s GDP rose 1.8% in 2022 compared to 2021. And the European Commission forecasts that the EU economy will avoid a downturn and its growth rate will reach 0.8% in 2023. More than a half of Baltic CEOs (51% in Latvia/Estonia and 55% in Lithuania) expect that the global economy will see a downturn in the next 12 months. The outlook is similar for their national economies – a downturn is expected by 63% of CEOs in Latvia, 62% in Estonia and 40% in Lithuania this year. However, CEOs in Europe and globally are even more pessimistic – a downturn is expected by 74% of CEOs in Central and Eastern Europe (CEE) and 75% in Western Europe, while the global percentage has reached 73%, the most pessimistic outlook in the last decade.1

Despite the geopolitical and economic turmoil, Baltic CEOs stay confident about their companies’ revenue increase over the next 12 months (46% in Latvia, 53% in Lithuania and 45% in Estonia). Baltic CEOs are also confident about their companies’ ability to overcome the challenges and they expect stable revenue growth over the next three years (80% in Latvia, 89% in Lithuania and 83% in Estonia), while only 50% of CEOs in CEE were confident about that.

Major threats

When asked about threats that are likely to affect their business in the next 12 months, Baltic CEOs named three:

  • Geopolitical conflict (cited as the main threat by CEOs in Latvia and Lithuania)
  • Inflation (the main risk in Estonia)
  • Energy crisis

These threats were far less relevant last year, when labour shortage was cited as the main challenge, but this year 80% of CEOs in Latvia, 82% in Lithuania and 50% in Estonia are concerned about threats posed by the geopolitical conflict.

To mitigate these threats, CEOs plan to diversify their product and service offerings (42% in Estonia, 37% in Latvia and 25% in Lithuania), improve cybersecurity and data privacy (41% in Estonia, 35% in Lithuania and 28% in Latvia), look for and expand into new markets (40% in Lithuania, 32% in Estonia and 25% in Latvia).

A third of CEOs in Latvia (31%) and Estonia (32%) do not think their companies will be economically viable a decade from now if they continue on their current path (47% in Lithuania). Global CEOs, too, are more pessimistic than their peers in Latvia and Estonia. For example, 45% in CEE do not think their companies will be economically viable a decade from now. However, Baltic CEOs are aware of the situation and willing to take appropriate steps to avoid this by investing in the automation of processes and systems, labour upskilling, technology implementation etc.

Full survey findings are available here.