This particularly affected exports, which were down 2.7 percent, the bank says. A general cooling in the global economy and the effects of coronavirus are likely to further reduce foreign trade in the first half of this year, the bank continued, though both direct investment into Estonia, and investments by Estonians outside of the country, saw a rise.

Exports

The fall in exports(of goods) at the end of last year fell mainly on the energy sector, as the high price of CO2 quotas made oil shale-generated electricity uncompetitive.

Whereas Estonia was a net exporter of electricity, it is now a net importer, according to the bank.

Growth in industrial exports in general was slowed by a general weakening in foreign demand. This particularly affected furniture makers and producers of electrical machinery and equipment.

Preliminary estimates suggest that exports were also lower in the first months of 2020 so far, than they were in Q1 2019.

Exports continued to grow in services, however, in the fourth quarter, in telecommunications, computer and information services, and in maintenance and repair service.

Imports and current account balance

Imports of goods were down 1.3 percent. The current account was supported by a positive balance for services, as noted above; current account surplus stood at 0.6 percent of GDP in the fourth quarter of last year, a reduction on the previous two years, the bank says.

The current and capital accounts were in surplus to the tune of €118 million in the fourth quarter of 2019, meaning the Estonian economy was a net lender and Estonian investors placed more financial assets abroad than they received.

The East Asia region: Japan, China, Hong Kong and Taiwan, accounts for 12 percent of Estonian imports according to the Organisation for Economic Co-operation and Development (OECD). Indicators for foreign trade are thus likely to fall even further in the first half of this year, the bank says.

Direct investment

Although the general investment climate in Europe cooled last year in the face of political and economic risks, investment activity directed to Estonia has remained relatively healthy, according to the Bank of Estonia.

Direct investment in Estonia increased by 13 percent in 2019, with the industrial sector receiving an increase of 9 percent.

Eesti Pank publishes an economic policy comment on external sector statistics, together with a much more detailed statistical infographic here, on the balance of payments, which covers changes in the current and capital accounts, the financial account, the international investment position, and external debt.

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