2015-04-30
Survey: more than half of enterprises believe that geopolitical tensions will not affect their business
The first results of the Survey of Lithuania’s Non-financial Enterprises shows that most entrepreneurs believe that the events in Ukraine will not affect or insignificantly affect the financial situation and ability to repay loans of the enterprises that they represent. During the study, the heads or financiers of half a thousand enterprises in different business sectors were surveyed.
“The least influence of the geopolitical conflict on businesses was seen by the construction sector, which is oriented towards the domestic market. Slightly more risks related to this are envisaged by service and industrial enterprises, while retailers are most concerned about the effect of the tensions in the East on business,” says Darius Kulikauskas, Head of the Macroprudential Division of the Bank of Lithuania’s Financial Stability Department, in summarising the results of the study.
According to the Survey, 59.5 per cent of the country’s enterprises, participating in the study, do not see any impact on their businesses from the conflict in Ukraine. More than a fifth (21.8%) of surveyed heads and financiers of enterprises indicated that the profitability of the enterprises represented by them could decrease, but the discharge of debt liabilities will not deteriorate as a result. Slight difficulties in fulfilling liabilities were noted by 9 per cent of enterprises, while 3.4 per cent of the Survey’s participants indicated serious threats to their businesses and great difficulty in fulfilling liabilities.
Among the construction sector’s enterprise heads and financiers, more than three thirds (76.1%) of those surveyed do not project a negative impact on their businesses; out of the service sector enterprises, 61.1 per cent claimed the same, industrial enterprises — 58.9 per cent, distribution enterprises — 45.9 per cent.
Among retailers, the most severe consequences to their businesses were envisaged by 5.7 per cent, in the services sector — 3.0 per cent, in industry and construction — respectively 2.4 and 2.3 per cent of enterprise heads and financiers.
According to the Survey’s data, the heads of small enterprises (up to 9 employees), claiming that their business will not be affected, amounted to 60.5 per cent, medium-sized enterprise (10–50 employees) heads — 61.1 per cent, and of large enterprises (more than 50 employees) — 56.6 per cent.
6.6 per cent of heads of small, 1.7 per cent of medium and 1.9 per cent of large enterprises indicated that the conflict could be a threat to business and make it significantly difficult to repay debts.
The goal of the Survey of Non-Financial Enterprises, initiated by the Bank of Lithuania, is to assess the demand for financial resources, development in borrowing from credit institutions and in lending conditions. Also, the study will aim to gather information on the financial condition of enterprises and changes in activities. Detailed results of the Survey will be published next week. By order of the Bank of Lithuania, the Survey was conducted by the company BERENT Research Baltic. The non-financial enterprises were surveyed in February–March 2015; responses were received from 501 non-financial enterprises operating in Lithuania.