Page 39 - CE Outlook Regions 2024

3.2.2 Banks
Despite the shock from the war, there have been limited capital outflows from the three states following the war, and the corporate sector remains robust – Baltic banks are well capitalised and businesses maintain substantial cash reserves.
The Baltic banking system remained stable throughout 2023 despite the heavy impact of the Ukraine war on the local economies and will remain such in 2024.
3.2.3 Industry
Industrial production was edging down in the Baltics at the end of 2023
and will likely stagnate in the first half of 2024.
The Ukraine war disrupted the existing supply chains and the new ones are much farther and costlier. The year of 2024 will still be a year of adaptation for Baltic industries.
Also, the region faces some other work productivity-related challenges, especially that a tangible rise in wages outpaces Baltic productivity, and shifting from labour-intensive production to high value added products is slower than in the Western Europe.
One of the other challenges the Baltics face is labour availability and their practical and professional skills. The lack of labour in the long term could really affect the possibility to raise the productivity of Baltic industry.
Responding to the lack of labour force, Baltic industry needs to intensify the use of various IoT solutions to improve production processes.
Many Baltic companies, especially those which are more energy-intensive, continued to struggle in 2023 and will likely struggle in 2024, especially without government’s support.
3.2.4 Energy & power
For the Baltic states, 2024 will be important as a year ahead of the synchronisation of the Baltic electricity grids with the European grid by early 2025. At the end of 2023, all the three states said they are ready for the synchronisation and the last works as part of it will be done in 2024.
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