CEOs in nine Central and Eastern European Countries believe the economic situation will improve and inflation will remain below 2% in 2016, according to the latest survey carried out by KPMG ‘Economy’s Pulse 2015’.
According to results, the most optimistic businessmen in the Baltic States are Lithuanians. The most pessimistic businessmen in this region are found in Estonia. Opinions of Latvian businessmen regarding economic development scenarios in 2016 differ from one another greatly.
61% of Lithuanians, 53% of Latvians and 29% of Estonians expect the economic situation to improve in 2016. 51% of Estonians, 31% of Latvians and 26% of Lithuanians expect the economic state to remain the same. 21% of Estonians, 17% of Latvians and 13% of Lithuanians expect the economic situation to worsen. In addition, 3% of Latvians emphasize economic growth may exceed expectations. 6% say there will be a major drop in economic development. An average of 51% respondents in CEE believe the economic situation will improve in 2016. 34% there will not be any major changes and 15% expect tougher times ahead.
«This year’s results in certain areas are the same as ones from last year’s survey. This means a certain level of security and stability among businessmen of this region. In a time when Europe and Baltic States face geopolitical and economic challenges, certainty that the majority of the region’s businessmen expect healthy economic environment and growth in 2016 comes as good news. Results of the survey also demonstrate stability in employment and even a slight increase in wages in the region in general,» – says Armine Movsisyan, leading partner of KPMG.
Similar to last year, 53% of respondents do not plan any major changes for the number of their employees. An average of 36% of companies plan to hire new employees and only 12% of respondents plan to reduce the number of employees. As for employees, the promise of a rise in wages in 2016 seems rather promising for them – 58% of respondents plan to increase wages of their employees next year.
According to 60% of respondents, in order to remain competitive on local and foreign markets, it is highly important to be able to keep qualified employees. CEOs therefore believe keeping skilled employees will be one of the priorities they will have to focus on in the near future.
45% of respondents claim intense competition is one of the main problems that limit growth of their turnover. 83% of respondents who expect turnover growth in 2016 believe the main factors that contribute to it include higher worker productivity (42%) and rise of local demand (40%).
Tax policy is another topic that worries the minds of businessmen. Governments are expected to provide simplified tax payment and administration procedures: 79% of respondents mention this as the main priority in tax area. Businessmen from this region express their support for an equal personal income tax system with equal rates. Businessmen oppose the adoption of progressive income tax offers.
73% of respondents note that shadow economy is a major problem in their respective country (75% last year). 39% of respondents say tax avoidance is the main reason for concern, followed by envelope wages (23%) and VAT fraud (21%).