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Analysts cautiously optimistic despite industrial production decline

Worker in a factory (photo is illustrative).
Worker in a factory (photo is illustrative). Source: Siim Lõvi/ERR

Estonian industrial production fell by 10.5 percent at constant prices last year, but analysts are cautiously optimistic after volumes began to stabilize at the end of 2023.

Output fell in all three industrial sectors last year, data from Statistics Estonia shows. By 21 percent in electricity production, by 9.8 percent in manufacturing, and by 4.7 percent in the case of mining.

"Manufacturing has been in decline for a year and a half now, and the decline has been very broad-based, affecting capital goods, such as those related to construction, as well as consumer goods, foodstuffs," the Ministry of Economic Affairs and Communications' Mario Lambing told Tuesday's "Aktuaalne kaamera".

Sven Mats, CEO of timber house frame producer Matek, said: "Indeed, last year there was a decline in both turnover and profits. For Matek in particular, turnover fell by almost 30 percent, but this was linked to the failure of one specific Swedish market. Which is good news – although last year was difficult and the start of this year is also challenging, there seems to be reason for a bit more optimism from the second quarter onwards."

Lambing said a small ray of hope had begun to appear.

"Looking at the latest developments, production volumes have been stable or even slightly increasing for about half a year. In several sectors, we are seeing a pattern of slowly emerging from the deepest hole. This growth is not very rapid, but it is relatively broad-based," the official said.

Commercial bank analysts also see positive signs.

"We saw a small increase in November, a little more in December and, thanks to this, the fourth quarter was at the same level as the third. In this sense, there has been a slight stabilization at the end of the year and in the last few months," said Lenno Uusküla, Luminor's chief economist.

"Whether this is now a big change and we will see growth in the future is a bit too early to say - the end of the year is sometimes when stocks are built up, orders are filled. In that sense, it's a bit too early to call the crisis over, but it has certainly brought some relief."

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Editor: Marko Tooming, Helen Wright

Source: Aktuaalne kaamera

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