At a press conference arranged by Swedbank the situation in the Baltic region was discussed. Cecilia Hermansson, Jörgen Kennemar and Magnus Alvesson raised important points and summarized the situation in the different countries right now and they informed about the conjuncture and structure in countries around the Baltic Sea from a business perspective for 2009.
Although the situation is serious right now there are some bright spots noted Cecilia Hermansson, when the forecast is that global GDP will stabilize in 2010.
They foresee that countries in the Baltic regions GDP will decline by 2.2 percent this year and that the rise next year will be 0.7 percent. The conjunction around the world, financial conditions and prices of raw materials are important prognostic risks.
Poland, which has relatively small imbalances, has developed the strongest in the region during the current year and avoids recession as a result of a relatively strong household sector and a previous support from EU structural funds.
The countries that are most affected in the region are Russia and Ukraine. The raw-material market´s reduction in price and a lower access to international capital leads to major imbalances and therefore causes a decline in both the Russian and Ukrainian economies. Both countries are seriously affected, and mainly in Russia, many companies have taken loans in foreign currencies. In 2008, the economy slowed down significantly, but Russia has large reserves that can stimulate the economy.
The growth in the Baltic region is dependent on exports and therefore the decline in the economies is affected by the global economic slowdown.
40 percent of Sweden's exports go to the Baltic region. In Estonia, Latvia and Lithuania, the situation is also critical. Imports fall faster than exports, but Cecilia Hermansson pointed out that there is a good entrepreneurial climate in Estonia and good opportunities to start a business.
Cecilia Hermansson said that in good times, it is often useful to stay on the domestic market but in bad times Swedish companies are more focused on other markets. It has been a huge demand for environmental technology companies in the region, and Cecilia pointed out that these opportunities are still there.
Magnus Alvesson commented that he has spoken to Swedish companies in the food industry in Ukraine and that they still have a good view of the situation. Now it is also cheaper and easier to get workers in Ukraine and he also believes that it may be good to introduce new products and services in Belarus.
Cecilia Helland