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Estonia struggles to boost exports while neighbors face economic downturn

Shipping containers and tank cars. Photo is illustrative.
Shipping containers and tank cars. Photo is illustrative. Source: Siim Lõvi /ERR

Estonia's exports are unlikely to pick up while neighboring countries face economic decline, experts believe. Data shows exports fell by 21 percent in October.

Maag Grupp, which owns Estonia's largest meat companies, increased its exports by just 1 percent over the last 11 months. While sales were stable at the start of the year, they have declined in recent months. The company told Monday's "Aktuaalne kaamera" it is not happy with this result.

"As one of the largest companies in Estonia, our strategy is still to export more, and that is what we want to do, and are trying to do. Inevitably, what is happening here in Estonia in terms of local input prices – wage increases, tax changes, and so on – affects our competitiveness in foreign markets and is part of the reason why growth has been below expectations," said Maag Food board member Martin Küsmaa.

The company's main export markets are Latvia and Lithuania, but just like Estonians, trends show customers prefer cheaper products.

Port of Tallinn (Tallinna Sadam) flag. Source: Ken Mürk/ERR

He said sales of sausages and vodka have risen due to the decrease in people's purchasing power. This reverses previous trends where sales of both had been falling.

If prices rise again, exports are expected to be hit even harder.

The cargo volumes at the Port of Tallinn have decreased by approximately 30 percent this year. The main reason is sanctions on Russia. The amount of crude oil, liquid gas, and vegetable oils fell by 70 percent.

"It's mainly the eastbound transit that used to be there, which is now completely gone. We don't see that coming back, instead, alternative fuels are coming in, hopefully, we are working on that," said Andrus Ait, financial manager at the Port of Tallinn. A further drop has been seen in the second half of the year, which could show a slowing of demand from the Nordic countries, he said.

Rasmus Kattai. Source: Eesti Pank

No trade boost is expected while neighboring countries' economies are contracting.

"Estonia's main export markets are the ones that are doing relatively worse among European countries. Take Finland, Sweden, Germany, Latvia, where the economy is expected to contract this year, while the European economy as a whole is still growing slightly," Bank of Estonia Economist Rasmus Kattai told AK.

In the big picture, Kattai said, the fall in exports is actually due to the decrease in prices in a year-on-year comparison.

"These mainly include electricity and various fuels, which last year were sold at a significantly higher price level and this year the price level has been much lower to the benefit of the consumer," Kattai said.


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Editor: Barbara Oja, Helen Wright

Source: Aktuaalne kaamera

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