RIGA - Demand for companies' products and services has decreased 5 percent to 100 percent, according to a survey of the Foreign Investors' Council in Latvia (FICIL) members.
"The results of the study show that the Covid-19 pandemic has already had an impact on most of the surveyed companies, with demand for their products and services falling 5 percent to 100 percent," said the Stockholm School of Economics in Riga Professor Arnis Sauka and FICIL head of policy Linda Helmane.
As emphasized by the authors of the report, Sauka and Helmane, the aim of the compiled foreign investors' opinions is to provide the policymakers with information that can contribute to making fair, strategic and evidence-based decisions on recovering from the current crisis.
Respondents highlighted various challenges they are faced with currently, such as ensuring health and safety of their employees, customers and clients, providing possibilities for working remotely, as well as continuing business in general in the current situation where many transactions and operations have been suspended.
As for the long-term concerns for business recovery, companies emphasize the challenge of retaining employees and clients, loss of revenue and decrease in business activities, uncertainty of mobility restrictions, financial sector development, demand for products and services, as well as change in overall behavior of consumers and businesses.
"It is too early to examine concrete problems arising based on Covid-19 crisis; however, it is important to keep exchanging information and communicating on the main questions the current situation alludes to. Also, a crucial factor is the economic recovery plan to overcome this crisis, the focus on which should start now," said FICIL Executive Board Chairwoman Gunta Jekabsone.
To gain an insight into the daily life of businesses during the state of emergency, the investors were also asked about the steps they are currently taking to mitigate the negative effect of the current situation. Majority mentioned reducing costs and expenses, which also include redundancies. Amongst other activities, entrepreneurs mention transitioning to remote work and implementing even stricter rules for safety within the companies, as well as implementing Covid-19 prevention measures outlined by the government.
Some companies seek help through active communication within their business communities or advice and financial support from their parent companies abroad.
On a positive note, some companies implement socially responsible activities adhering to best practices. As regards to their parent companies, some are already in the stage of addressing liquidity issues and top-level crisis management.
The survey inquired about the possible long-term implications on the overall economy, to which the responses varied from negative to positive.
Among the negative long-term implications were increase in unemployment, bankruptcies, poverty and global recession. As to the positive, companies mentioned the possible improvement in the efficiency of remote ways of doing business, advancement of digital skills, as well as positive change in consumer behavior and values.
Foreign investors also reflected on what should be done to stabilize the business climate in Latvia after the crisis, as well as provide potential solutions on how the state could support the affected businesses, for example, sick-leave payments and loan guarantees. Investors also emphasize the necessity of improved communication with regards to the impact of Covid-19, efficient support for medical services to fight the pandemic, and call for strategic planning onwards.