Two thirds of small and medium-sized businesses in the Baltic states are cautiously optimistic when assessing their company's growth prospects for 2026, according to a survey of small and medium-sized enterprises (SMEs)¹ conducted by SEB bank, in which more than 1,200 companies across the Baltic states took part. The main obstacles to business development cited in all three Baltic states are the tax burden and energy prices.

"Baltic macroeconomic forecasts point to growth — this is confirmed by GDP growth, consumption, employment and other data. This picture is broadly reflected among small and medium-sized businesses too, where the optimistic mood remains at the 2025 level. It is worth recalling that in the survey SEB carried out last autumn among chief financial officers of large companies, the number of optimistic business leaders was the highest since 2022². Small and medium-sized enterprises play a significant role in driving innovation, employment and economic growth in the Baltic region, so a survey of business leaders provides valuable information that makes it possible to anticipate and address problems more accurately, as well as to take advantage of development opportunities," says Arnis Škapars, member of the management board of SEB bank, describing the significance of the survey.

The number of optimists in Latvia is unchanged, while businesses in Lithuania are becoming more cautious

Of all the business leaders surveyed, 71% in Latvia, 66% in Estonia and 64% in Lithuania count themselves as cautious optimists. While in Latvia and Estonia the number of optimists has barely changed over the year, in Lithuania it has fallen by seven percentage points (compared with the 2025 survey). In Lithuania the number of pessimists has risen (23% of business leaders, against 15% last year), whereas in Estonia (25% pessimists) and Latvia (21%) it has not changed significantly.

In Latvia there are mixed attitudes towards business growth across different sectors, the survey data show. Administrative and support services stand out as the most stable sector, with 100% moderate optimists. The manufacturing sector is also positively disposed (21% optimists), and sentiment is relatively stronger in education and healthcare. The weakest prospects are in the arts, entertainment and recreation sector (40% pessimists), followed by trade (31%) and agriculture (25%).

Influencing factors — taxes and energy prices

Comparing the factors that most affect company growth, those cited in Latvia are taxes, high energy prices and cumbersome bureaucracy. Business leaders in Estonia also highlight the impact of inflation, while in Lithuania the challenge of finding markets for products and services is among the four main influencing factors.

Meanwhile, when assessing the expected changes in demand for their goods and services, roughly 61-66% of small and medium-sized enterprises in the Baltics forecast stability. In Lithuania the share of companies forecasting an increase in demand is the highest in the Baltics (23%), while 17% of business leaders expect a decrease. In Latvia the ratio is the reverse — 20% of business leaders believe a fall in demand is to be expected, while 14% see scope for growth. In Estonia, meanwhile, the two groups are balanced: 17% see scope for growth, while 18% think demand will shrink this year.

Caution dominates in Latvia and Estonia, while Lithuania is keen to expand

Asked about this year's priorities, business leaders in the Baltics highlight two main ones: improving their company's stability and optimising costs. More than half of those surveyed "vote" for these two priorities. Opinions differ on the third most important priority — while in Latvia and Estonia it is increasing cash flow (35% of business leaders in Latvia, 43% in Estonia), in Lithuania 48% of business leaders want to launch new products or services this year. The survey shows that Lithuanian business leaders are considerably more active in investing in capacity expansion and in seeking new markets — their share is twice as high as among Latvian and Estonian companies.

A relatively small proportion of Baltic companies give priority to digitalisation and innovation. Sustainability still matters to only around one company in ten in Lithuania and Estonia, and to just 6% of respondents in Latvia.

Staff numbers will remain unchanged

Small and medium-sized enterprises have long been cautious about increasing their headcount. The situation has not changed in Latvia either, where four out of five companies do not plan to change their staff numbers, 6% plan to reduce them, and 15% are considering taking on additional employees. In Lithuania, plans to expand the workforce have become more moderate, yet almost one company in five still plans to hire new staff. The share of companies not planning any changes has risen to 71%. In Estonia, meanwhile, there is a slight increase in optimism: the share of companies planning to increase their headcount has doubled compared with the previous year, to 15%, while the share of companies expecting to cut staff numbers is 6%.

Most comfortable in the home market, with no investment plans

Small and medium-sized businesses feel most comfortable in their own home market — 75% of business leaders in Estonia, 73% in Latvia and 63% in Lithuania said they would continue to focus on operating in the home market this year. Ambitions to enter new markets are more cautious in Latvia and Estonia, where only around one company in ten plans to expand abroad. In Lithuania, by contrast, 23% of business leaders express such an intention. When assessing the opportunities for entering foreign markets, business leaders focus mainly on the neighbouring Baltic states, the Nordic countries, the USA, Asian countries and the United Kingdom.

As for investment plans, roughly a third of business leaders in the Baltics answered that they did not know whether they would make any investments this year. A relatively large share of business leaders (31% in Latvia, over 20% in Estonia and Lithuania) are not planning any investments at all. Those who do intend to invest mostly plan to do so from their own funds and on a fairly modest scale. This may limit not only the growth potential of individual companies, but also the prospects for broader economic development.

Plans to develop products and services

Answering questions about innovation and development plans, Baltic business leaders name product and service development as their priority. It was cited by 28% of business leaders in Estonia, 27% in Lithuania and 23% in Latvia. This shows that, despite differing economic conditions, Baltic SMEs regard renewing their products as the route to competitiveness. The second most pronounced trend is the importance of automating production and administrative processes, and the third priority is employee-related innovation. Lithuania stands out most here, where 22% of SMEs are focusing on staff development this year, ahead of Latvia (13%) and Estonia (12%).